Hedge Funds
German-speaking institutions return to hedge funds as alternatives climb to 32.3% of portfolios, BAI survey finds
The share of DACH institutions holding hedge funds and liquid alternatives rose to 21% from 15%, and planned increases outpace cuts by 33 points.
HedgeWeekly Hedge Fund Desk ·
Institutional investors in Germany, Austria and Switzerland are moving back toward hedge funds, according to the 2026 Investor Survey from the Bundesverband Alternative Investments (BAI), the German alternatives industry association. The poll of 105 institutions with roughly €2.9tn in combined assets, conducted in July and August, found the proportion holding hedge funds and liquid alternatives rose to 21% from 15% a year earlier, with 23% expecting to be invested within the next twelve months.
The average allocation to the category across all respondents more than doubled to 1.4% from 0.6%, Opalesque reported from the study, while investors already in the asset class hold an average of 7.0%. On the survey's measure of planned changes, hedge funds and liquid alternatives posted a net balance of +33, a 16-point improvement on the prior year, though infrastructure debt and corporate private debt still led at +40 each.
Overall, alternatives now make up an average 32.3% of DACH institutional portfolios, up from 30.3%, and 33.7% on an asset-weighted basis. Real estate remained the one clearly negative segment, with more investors planning to reduce exposure than add to it, while corporate private equity rose to 7.3% of portfolios. On geography, seven in ten respondents plan to raise private markets exposure in Europe, compared with an even 40% split between increases and cuts for North America. BAI noted possible self-selection bias because participants answered an industry association's invitation.
Why it matters: German insurers, pension schemes and Swiss and Austrian institutions have long been light hedge fund investors, so a jump from 15% to 21% participation signals a widening, if still small, pool of European demand at a time when US pensions such as CalPERS are also revisiting the asset class. Managers marketing liquid diversifiers into the region may find a more receptive audience heading into 2027, while the even split on North American exposure suggests DACH allocators are weighing how much US risk to carry.