Alli DiClemente
Executive director – capital introduction
The annual Hedgeweek Ones to Watch report serves as a barometer for the hedge fund launch landscape and allocator sentiment. This year, it felt like more than that. With 20 featured funds, survey input from more than 150 managers and allocators, and expert commentary from the follow-up webinar, it captured something deeper: a recalibration.
What we’re seeing at Marex aligns closely with this year’s findings. The interest is there. So is the capital. But it’s flowing more selectively, with allocators scrutinizing strategy, structure and substance more closely than ever.
Here’s what’s changed, and what’s standing out.
Selectivity is up, but so is allocator intent
Let’s start with the mood. The report notes that only 46% of allocators are actively open to emerging managers. But that figure doesn’t tell the full story. For the remaining 54%, while the door may not be wide open, it doesn’t mean it’s closed.
Allocators are still engaging and putting in the work on emerging managers, but they are being more purposeful. They’re focused on managers who solve something specific in their portfolio construction. According to the survey, allocations are being made for three primary reasons: outperformance potential (33%), access to niche strategies (33%) and favorable terms (22%).
What’s gone is the broad appetite for generalist long/short. In the webinar, multiple allocators made this point clearly: it’s not about a manager’s ambition, it’s about whether they understand their role in a modern institutional portfolio. Niche isn’t niche anymore. It’s the requirement.
The multi-strat effect: two paths, two realities
There’s no ignoring the gravitational pull of the multi-strat platforms. Their influence is shaping talent flows and launch dynamics in a way the industry hasn’t fully reckoned with.
These platforms are not only hoovering up talent with generous guarantees, they’re also actively backing new managers who previously would have tried to launch independently. As a result, we’re seeing a bifurcation in the market.
On one path, spinouts from brand name multi-manager platforms are commanding $1bn+ in institutional capital on day one. On the other, capable managers without a brand halo are launching lean, often with under $50m, and in some cases giving up equity just to get out the gate.
This divide showed up in the report, where three in four new managers cited capital raising as their primary challenge. It’s not just harder, it’s more binary, and allocators are adjusting how they view pedigree and platform history as a result.
Why allocators still show up for emerging managers
On the panel, several allocators were clear: emerging managers play a vital role in their portfolio. One panelist highlighted how they view emerging managers not just as an asset class, but as a philosophy. The right ones bring hunger, alignment and a sharp, defined edge.
What they’re not looking for: a half-formed version of a large fund. The best early stage managers are behaving like institutional businesses well before they reach institutional scale. That’s what earns attention and ultimately, capital.
Fees are evolving, but it’s alignment that drives the conversation
The webinar surfaced several views on fees, but the common thread was that alignment matters more than headline pricing.
The traditional 2-and-20 model is largely off the table, unless the manager can demonstrate true scarcity of capacity or a track record of outsized alpha. For everyone else, the market has moved on. Managers launching with legacy fee structures risk being filtered out early, unless they can explain why it makes sense for their strategy.
Allocator thinking has evolved. Do the economics reflect the role the manager plays? Hurdles, founder share classes and tiered performance fees are increasingly seen as signals of thoughtfulness and long-term fit.
For emerging managers, the message is simple but important: your fee structure should reinforce your narrative – your strategy, your liquidity profile, your investor base – not imitate the economics of a firm you aspire to be.
Customization is now the default and it’s reshaping operations
Another recurring theme was customization and just how far it’s come.
Allocators now routinely expect SMAs and tailored frameworks. One panelist described it as the end of the flagship fund era – and it’s hard to argue.
This is more than a structural shift. It’s philosophical. Customization is about control. Allocators want the ability to shape their exposure, risk and reporting, not just participate.
That comes at a cost. The report notes a significant rise in infrastructure demands, forcing tough decisions for lean teams: absorb those costs and compress margins, or pass them through and risk investor pushback. At the same time, technological advances are making it easier for managers to navigate the infrastructure demands of SMAs.
The managers succeeding here are those who build for this from day one, and clearly communicate how they’re managing it.
APAC and the Middle East are becoming launch growth centers
Strategy mix is shifting and so is geography.
While equity remains dominant at 35% of launches, we’re seeing strong growth in quant strategies (15%), global macro (10%), multi-strat (10%) and commodities (10%).
These shifts mirror allocator preferences. Market neutral and multi-strat funds received the highest favorability scores in this year’s survey. In contrast, digital asset managers were viewed as ‘highly unfavorable’ by more than one-third of allocators.
Geographically, the global launch map is starting to redraw itself:
- North America remains the leader at 45%, though that’s down from prior years
- Europe holds steady at 25%
- Asia-Pacific accounts for 20% of new launches
- Middle East now represents 10% – a meaningful increase
In APAC, we’re seeing regionally focused equity and macro funds from Hong Kong to Sydney. In the Middle East, hubs like Dubai and Abu Dhabi are fast becoming credible launchpads, not just for capital access, but for favorable regulation, growing allocator engagement and exposure to sovereign wealth. A number of recent high-profile fund launches are a clear sign of that momentum.
In closing
Launching a fund in 2025 means navigating one of the most selective and structurally demanding environments we’ve seen in years. But that doesn’t mean it’s closed. It means the pitch has to be sharper.
Allocators aren’t just asking “What are your numbers?” They’re asking, “What’s your role in my portfolio?”
The managers who can answer that clearly – and build accordingly – are the ones who will break through.
Download the full report: Hedgeweek Ones to Watch 2025.
To watch the Hedgeweek webinar, Allocator Perspectives on Emerging Managers, click here.
