Emerging managers in 2026: allocator appetite is back, but the bar has moved

The headline finding from Hedgeweek’s Ones to Watch 2026 report, supported by Marex, is an encouraging one.

After a cautious period, allocator appetite for emerging managers has returned with force. Survey data shows that two-thirds of allocators deployed capital over the past year and just as many are set to do so again in 2026. Meanwhile, 78% of managers reported positive allocator interest.

That shift in sentiment is clearly evident in broader industry dynamics. Hedge fund launches are at their highest level since 2021, while liquidations have fallen to a more than 20-year low. While at the same time, industry assets now exceed $5tn for the first time. This environment for new launches is meaningfully more supportive than in recent cycles.

The strength of this year’s Ones to Watch cohort reflects that environment. The 20 hedge fund launches featured in the report have collectively raised more than $6bn in launch capital, representing one of the strongest classes of new managers in recent years.

Yet while the mood has improved, it would be a mistake to interpret this as a broad reopening of the market. The research points to a structural shift towards an environment that is increasingly willing to back emerging managers, but far more selective about who receives capital, how it is allocated and the terms associated.

In other words, allocator appetite is back, but the bar has moved.

The report’s findings were explored during a Hedgeweek webinar, which I had the pleasure of hosting. Several themes stood out.

Why emerging managers are back in focus

The renewed interest in emerging managers is closely tied to the market environment itself.

For much of the previous decade, low volatility, abundant liquidity and supportive monetary policy created conditions where passive exposure and traditional portfolio construction often delivered attractive outcomes. Today, the backdrop looks very different.

Geopolitical uncertainty, higher levels of government debt and increasingly unpredictable markets are creating a more complex investment environment. As a result, allocators are looking for differentiated sources of alpha and diversification.

This helps explain why global macro and commodities emerged as the most sought-after strategy in the Ones to Watch research, with 76% of allocators identifying macro as an area of interest. Commodity-focused strategies also saw one of the sharpest increases in allocator demand, with forward allocation intent rising from 33% to 59%.

More broadly, allocators appear to be seeking managers capable of navigating a world where volatility is no longer an occasional event but an enduring feature of markets. That is playing directly to the strengths of specialist emerging managers.

The rise of specialist talent

Across the industry, some of the most compelling launches are being led by portfolio managers who have spent years operating within large multi-manager platforms and institutional investment firms. These individuals are often coming to market with proven investment processes, established track records and deep expertise in highly specialized areas.

This is one of the key reasons why today’s emerging manager landscape feels distinct from prior cycles.

A consistent theme throughout the discussion was that allocators are increasingly prioritizing specialist expertise over broad, generalist propositions. Rather than covering a wide opportunity set, managers are now expected to present highly defined strategies with clear areas of focus. Managers need to be able to articulate exactly what they do, why they have an edge and where that advantage is sustainable, often within a specific sector, strategy or niche opportunity set.

That shift is clearly reflected in this year’s Ones to Watch cohort, where many of the featured managers have taken years of domain expertise and translated it into focused, differentiated investment businesses.

The access paradox

One of the most interesting findings from the research was what Hedgeweek termed the ‘access paradox’.

Nearly half of emerging managers cited access to capital as a significant fundraising challenge. Yet three-quarters of allocators reported investing in emerging managers despite not operating a formal program.

At first glance, those findings appear contradictory, but they suggest that the challenge is often less about appetite for emerging managers and more about access.

Allocators continue to set a high threshold for institutional credibility and operational maturity, however, many are engaging with managers earlier than they have in previous cycles.

For many emerging managers, the challenge is therefore identifying allocators most likely to be interested in their strategy and building those relationships before capital is formally deployed. Relationships, introductions and established networks remain an important part of the process.

The research also highlights important regional differences. North American investors continue to demonstrate a greater willingness to make large, high-conviction allocations to emerging managers, while European investors tend to favor a broader spread of smaller commitments. For managers raising capital globally, understanding those nuances is becoming increasingly important.

Institutional readiness matters earlier than ever

If allocator interest has increased, so too have expectations.

The discussion highlighted that investment due diligence and operational due diligence are no longer sequential conversations. Both matter from the outset.

Managers are expected to demonstrate a compelling investment process along with the infrastructure and operational standards that would once have been associated with much larger firms. Infrastructure, resilience, governance, risk management and the broader operating model are all being evaluated earlier in the process.

The good news is that managers are better equipped than ever to meet those expectations. Access to specialist service providers, technology and outsourced operating models means firms can build institutional-quality businesses far earlier in their lifecycle than was previously possible. As a result, emerging managers can remain lean while still presenting the level of maturity that allocators increasingly expect.

The growing role of SMAs

The discussion highlighted the continued expansion of separately managed accounts (SMAs) and their growing influence on the launch environment.

Many allocators now view SMAs as an attractive way to access specialist talent while maintaining greater transparency, control and capital efficiency. At the same time, advances in technology and third-party support have made SMA structures far more accessible than they once were.

As a result, SMAs are creating new pathways to capital for emerging managers and enabling allocators to engage with managers earlier in their lifecycle. While commingled funds remain an important part of the ecosystem, SMAs are increasingly providing an alternative route to scale for firms that may previously have relied exclusively on traditional fundraising models.

What makes an emerging manager compelling in 2026?

Taken together, the research findings and panel discussion suggest that 2026 may prove to be one of the most attractive launch environments of the past decade.

Yet the managers making the strongest impression are not doing so by chance. The Ones to Watch cohort reveals several common characteristics among the strongest launches: a clearly defined edge, a differentiated strategy, strong operational foundations and a credible plan for building a sustainable business.

That combination helps explain why some managers are building momentum while others continue to struggle.

 

To learn more about this year’s Ones to Watch cohort and the trends shaping the emerging manager landscape, see the full Hedgeweek Ones to Watch 2026 report and watch the webinar playback, supported by Marex.