Blackstone on hedge funds: Why multi-strats are back

Multi-strategy hedge funds are increasingly vital for institutional portfolios as traditional 60-40 allocations struggle with rising correlations between stocks and bonds. With assets under management reaching an estimated $595 billion by the end of 2025, these funds offer a source of uncorrelated, double-digit returns that consistently outperform traditional asset classes. While the sector faces scrutiny over high fees and "pass-through" cost structures, top-tier firms maintain their edge through superior talent acquisition, advanced risk management, and proprietary technology. Blackstone’s Joe Dowling and Riad Abrahams highlight that the most successful platforms are evolving beyond equity long-short strategies, integrating AI to isolate alpha and expanding into semi-liquid and private credit markets. This shift reflects a broader institutional demand for durable, consistent performance in a volatile, deglobalizing world where traditional diversification strategies are no longer sufficient.