125. Hedge funds just had their best year in decades. But, why and what's next?

[Music] Hello and welcome back to the Long Short and indeed it is a very welcome back to my co-hosts who joins me in a saddle today. Drew, welcome back. Thank you very much. Great to be back. So, hedge funds had a great year overall last year. In fact, the post-COVID era is proving to be the industry's strongest period performance since the 1990s with the greatest share of returns a tribute to Alpha on record. And there has been no shortage of research and commentary to identify the big winners, but in a crowded field some reports still stand out and among those comes from the PB desk at Goldman Sachs. They recently published 2026 hedge fund industry outlook report clearly sets out how the alternative investment industry delivered for investors last year and signpost where the industry is headed this year. And we are delighted to welcome one of the authors of that report back to the Long Short studio to help us unpack the findings. Freddie Parker is a managing director in Goldman's global banking and markets, thick and equities desk. Freddie, very welcome back to the Long Short. I sound great to be back. So, let's start then with the big picture before we drill into the details. Your latest report gives a comprehensive overview of hedge fund performance last year. So at a high level, how did the industry perform and how significant was last year in historical terms? I think it was a pretty excellent year for hedge funds no matter which way you cut it. We have been trying to make the point over the last few years that we think we've sort of moved into a pretty qualitatively different era for hedge fund returns. As you take the longer view, there was this period post GFC, really 2010 through to the start of COVID in which you had markets of broadly suppressed volatility of high correlations between asset classes, generally a market in which it was difficult for active management in all its forms to add value. And I think hedge funds were no exception to that. And we think really these last few years both with the volatility of the COVID period and its aftermath and then more recently the move into the higher rates paradigm that started in 2022. Hedge funds have really begun to distinguish themselves once again. And this is actually very consistent with history. If you look back over the last 30, 40 years of hedge fund returns, periods in which the best returns and best alpha have been generated are tended to coincide with higher rates. Higher rates obviously get you better outcome from the point of view of dispersion and lower correlations between assets, which is obviously very good for security selection, tends to generate higher volatility, which is good for certain other strategies like macro, but profit from those environments. And we've seen that very clearly play through in the last couple of years. Our data last year put hedge funds at about plus 12% for the year, which is almost exactly what they delivered in 2024. But as you take this sort of period from 2020 onwards, we think we're now in the best period for hedge funds from a return to alpha generation standpoint since the 90s. And 2025 really seemed to underline that. You mentioned alpha generation there. And one of the sub themes that jumped out to me was the point that long short equity strategies recorded very high alpha generation by your measure. Just before we go any deeper, for a casual listener, what do you mean by this? And how do you measure alpha over time in this context? Yeah, so we are able to disaggregate the returns of long short funds using the data available to us through our prime services business. So we see the positions of what we think is a very broad cross section of long short strategies. And from that, we can do a pretty detailed analysis and disaggregation of what drives those returns. When we talk about alpha strictly, definitely, we're talking about everything which is not attributable to both market exposure and and market sensitivity. So market exposure being what netty run to the market market sensitivity being your your bias towards higher or low beta stocks. But if you tape those out, then we call everything else within that alpha. Now there's various different return contributors within that alpha. So some of those could be to help to protect particular countries or to particular sectors or indeed to dial factors, whether that's momentum or value or quality or whatever it might be. And then if you take all of those out, you're left with a residual, which is called asset selection in our model, I think platforms and multi managers often refer to this as an idiot that you think of this is really the true stock selection alpha. And it was the strongest year for on our records, which goes back to 2016, for alpha on aggregate. And the second strongest, yeah, just in terms of that, that asset selection or more idiosyncratic piece. Excellent. And then I just to jump in again, by the same token, you identified that levels of beta have declined, which I found interesting because when I'm wearing my other hat on the comms side of things, I'm sure you also noticed there's quite a lot of commentary already this year around concentration risk among hedge fund strategies and their alignment to major indices. And there's always this talk around, you know, real alpha versus beta at times when equities have sort of also done somewhat well by historical standards. So is there any contradiction here? Could you just help our listeners pass through sort of these themes? Yeah, so I think it really has to do with the interval on which you measure it. And I think I probably read the same stories that you did. There was a narrative that last year hedge fund returns were very correlated with market returns. But what you have to remember is if you're looking at this on the interval of one year, you're looking at monthly returns. And so you have 12 observations. The 12 observations, to my mind, is not really a valid period in which to make a meaningful conclusion around correlation. Last year, equity markets did well. hedge funds also did well. But I think if you draw a conclusion just based on those sort of the 12 monthly observations, you're sort of missing the point. The point we made in the report is sort of based on a longer time series. So we're looking at three-year trailing beaters. And as you look at that over time, it's a very, very consistent downtrend. And then I would say the other thing to know, as you think about the, you know, the beta versus alpha discussion within long short, when we're looking at this because we're looking at positions held on our book, we get to see daily observations. So we've got 250 data points. We haven't got 12. So we can be reasonably confident that when we're assessing alpha and beta, we're really distinguishing between the two accurately. But I think that this sort of narrative around, oh, hedge fund returns were very correlated with market returns last year. But if I think is a little bit misleading, I think the reality is it was a good year for hedge funds and markets. Obviously a supportive tailwind from market beta is not unhelpful. But you shouldn't let that get in the way of the fact that it was a very good alpha year. And it's very apparent from our data that the alpha was strong. So let's talk a little bit then about some of the strategies and performance behind some of the strategies. Freddie, those people who would be familiar with some of the research that's being produced by your firm will have read several reports on the multi strategy manager, the multi manager universe. In particular, they always attract attention and again in the news, again over the last couple of weeks, because of a scale and a diversified approach. So let's start with that then. How did the multi strategy perform last year and what differentiated the stronger platforms? Yes, so multi, I guess first of all, we should just draw a little bit of distinction between multi strata and multi manager here. So always good to do that. Yeah, I think so sometimes these terms are used interchangeably and there's a sort of subtle bit of an important difference. So multi strategy being firms that operate in several different strategies and asset classes, multi manager really being the firms where you have this very particular risk taking model of lots of individual PMs who are essentially on an autonomous basis taking risk within certain guidelines and being compensated for me lately for doing so. And there are multi strap multi managers and then of course there are multi strap firms who run a single manager approach which is which is quite different. I think where your question is going is the platform is right, the multi managers, here the constituency that really attracts the attention and have done consistently for the last few years. So in short performance very good from this this this constituency again. So our numbers have them on average plus 11 last year almost exactly in line with what they delivered in 2024. The other point that I would make is there's been a huge amount of growth in this space in the last few years. Obviously when edge fund strategies experience very strong growth I think Alex the question around what's the right size of these strategies are they growing too fast? Is there a risk that they start to crowd up their alphas? And in 2023 when you had quite soft performance from the multi-manager community, so on average we think about 5%. I think those questions were being asked very reasonably. And then look at the last two years and multi-managers have pretty resoundingly delivered a repost to that. And when you consider how large the industry is at this point in time, we think that we've seen two years in a row now of record, or months in dollar terms, right? So even as this space grows, they continue to be able to churn out the results and what you see according to this is bigger and bigger sort of dollar PNL to investors. Within that I think the one thing that is worth highlighting is we have seen over long periods of time it's tended to be the largest firms that have outperformed in the multi-manager space. And you know, there's some potentially good reasons behind this as they maybe have certain scale benefits that they've accrued. Last year was very interesting because within our data it's the first time since 2018, in which the $10 billion plus cohort of multi-managers didn't deliver the high returns as a whole. And so she was fans in the sort of corner, like, that $5 billion bracket that delivered some of the strongest returns last year. I read that too and I honestly that really fascinated me in terms of like the change that you're seeing now, what can you put that down to Freddie if anything? Is it just happenstance of the year just gone or? Yeah, I've said it'd been cautioning against over interpretation of that because I think it has to do perhaps with the idiosyncratic strategy mix of some of these largest firms, directly where there returns have come from, some of the challenges in the individual strategies last year. So my gut reaction is that this is an exception rather than the rule, but it'll be interesting to see because these firms have continued to grow and scale. And you know, in most hedge fund strategies at some point in time size becomes the enemy of performance. It doesn't seem to have happened to them yet, but I think it's very interesting to me. The other strategy that I re was excited to ask you about was quants and that's because we heard at various times and in various forums last year that it was really struggled. It was a big struggle to be a trend following because there were no clear trends and we live in a world now where markets are whipsawing very rapidly and you can't look away for five minutes without the news cycle or some geopolitical shenanigans going on that radically changed the board and that is obviously very difficult for those that are trying to establish and build upon trends. So just sort of jumping to the end of the year, how did quants do and is it is it right to say that they struggled as the year went on again, I think we have to just do a little clarification of terms. So as I think about the universe of systematic strategies, I tend to view it as on which tends to be more of the equity oriented strategies, so generally market neutral, including things like statile, but also some of the more factor based strategies. And then I would think about systematic macro and trend following and they're quite distinct in terms of the onwards drivers. So you have to sort of separate them, but let's take let's take the systematic macro CT ap's because you asked about you know lack of trends and then we'll comment on quantum a second. It was a really, really hard first half of last year because most of these firms are. I would say grounded on trying to find medium term trends, so weeks to months. And then you have markets that see violent V shaped movements as was the case on several occasions last year. Then it's pretty tough for those strategies to to to generate a return. And that's very consistent with with history, I think, you know, the returns of those strategies are. Very predictable and so far as they do well in markets with clear and persistent trends and they do poorly in markets with lots of reversals and that was really exactly what we saw last year. Second half of the year, I think trends were clear and we saw a pretty substantial recovery. You know, the CTA systematic macro universe was was down sort of double digits at the mid year point was actually back just about into positive territory by year and so. Stage of pretty strong comeback in the second half of the year, but undoubtedly a difficult year and frankly caps, you know, period of three difficult years after the strong returns, these 11 2022. To put those to one side and then if you look at the quant universe. So more sort of quad equity oriented strategies. It was not a straight forward lost year last year by by any means. And there were a few sort of. Orments pockets that were noticeably challenging, I think particularly for managers operating in. And there was a reason of a size drawdown in July 2025 that you know compares in magnitude to some of the other reasonable drawdowns of the last few years. Some managers we saw struggled more than others. But nevertheless, our quantum performance estimate on average got back to 10% give or take by year end. And quant is the best performing strategy within the you know, the suite of strategies that we look at on a five year basis. So things still still strong there, but I think definitely some evidence of some certain sub strategies with within quant starting to struggle a little bit more last year. Yeah, it was it was an interesting period. Let's put it that way from some of how these strategies had to navigate the various challenges. That last year presented to them. I'd love to hear if there's any bright news at all you can report in terms of the launch environment. You know, we've had two as you say, Freddie, we've had two years of strong growth from the industry. How has that presented itself in terms of firms looking to so new funds or just new funds themselves launching? We've seen I think a pretty healthy new launch environment for the last few years. There was a. I would say a boom in new launches around the 2020, 2021 period. We then had a tick down in 22 and you know that you know when market conditions were clearly more difficult. And things have started to recover since then. So we were a little below in 25 the number of new launches that we saw in 2024. I guess I should I should clarify here that when when we talk about our observations of new launches. We we limit our observations to just those those firms that the launch with with GS as a prime broker. We think it's we think it's still a reasonable proxy for industry activity, but that way we can kind of look at a very very clean data set. And you know when we're not at the highs, but we're in a reasonably healthy shape. The other thing I'd say is there was maybe a little bit of pressure on 2025 just from the strength of the 24 new launch class in asset raising. So our 24 new launch class, which had a number of billion dollar plus launches in it. Was a an average launch size of 500 million dollars, which is an all time record for us. So you could maybe argue that there's some sort of poll forward of demand for launches into those mega launches in 24 that then sort of suppresses the 25 new launch class a little bit. But nevertheless, it was still a pretty healthy new launch class last year. We saw average size 300 million dollars median about 120 million dollars. So you know, the launches that we're seeing, even though that the absolute number of launches is down a little bit from the peaks. And are pretty substantial and attracting reasonable capital. So it feels like a pretty healthy environment. I think it's always a good new launches always a good sort of indicator of the health of the industry and I think on that metric. Things look pretty good. I know Tom is very keen to jump forward to talk about the investor piece, which was also a big part of this report. But just before we do. You'll forgive me one more because I want to go back to the point you were making on the multi strut multi managers because I've got a quote here that I'll put you from the report that says as performance has improved allocator focus on negotiating fees and terms has lessened with net returns becoming the clear priority for most. This really jumped out to me, not least because Amor is very closely or has been very closely following fees for some time in our own research. But also because it feels like for some time now people talk about fees in the round, but really there's two parallel conversations here in the industry when it comes to fees, which is those. The conversation going on when you're talking about those big multi strut pod shops that you mentioned before and then there's everybody else. And so I just wanted to clarify whether this trend you've identified around fees does that exist to both those groups or is there any nuances there to note because often it's a more complex conversation and some people realize. I think it is more complex I think that's that's a fair observation, but I do think it actually applies to both you know I don't think this is really just a case of multi managers. can charge whatever they like and everyone else is still under pressure. I think that there has been a substantial lessening in fee pressure from allocators over the last few years, which I don't think is a coincidence at all that it's happened at the same time that performance has vastly improved. In that period of 2010 through 19, let's say, when returns were just lower, I think there was a lot of focus on fees because that was maybe the only lever that you had to pull as an allocator. And also, let's not forget, if your absolute returns are lower, the impact of fees is higher. You take your one and a half and 20 out of 10 gross versus an eight gross versus six gross, like the consumption of the gross returns by fees obviously becomes higher. So I think fees, sorry, returns going higher, I think just naturally moves the focus elsewhere. But I think also that one of the things we hear very clearly from allocators is they don't want to solve for fees as the first order consideration. They don't want to transact on price. They want to find the best managers, they want to find the best net returns. Obviously, they would like all else equal, the lowest fees, but they're not going to compromise on the quality of firms they're investing in simply to get a good deal on fees. And I think that's a sensible posture to take. And I think it's one that I think we're sort of seeing broadly across both in the call it traditional head fund fee structures and pass through. Now obviously, the pass through dimension is interesting simply because those fees do tend to be much, much higher. But what we hear from allocators on that front and we published another report on multi managers last year and we talked about this a little bit. They think of sort of their share the gross returns, the term that tends to get used is alpha share, but really just think of it as net returns divided by gross returns. And in the multi manager space, allocators will tell us that 50% feels like a reasonable benchmark to aim for. I think in the industry at large, it's probably more like 70%. So they are being measured by two different yardstakes. But I think the allocators who invest in the platforms and who like that structure acknowledge it's just a more expensive business model to run. And it's sort of the price of entry unfortunately. If you want to invest in those managers, that's sort of the fee structure that prevails. And we see the majority of that multi manager co-ho having moved towards pass through fees. In a world where innovation drives opportunity, tomorrow's leading investment management firms are being built today. Join industry peers at aim as next generation manager forum on Thursday the 19th of May, 2026 in London, the flagship event for senior leaders from emerging firms. Spent an afternoon diving into asset raising strategies, the latest regulatory challenges, and practical insights on launching and managing a successful alternative investment business. You'll hear from experienced managers, investors and industry experts and walk away with real world guidance and fresh connections that can help shape your next stage of growth. And when the discussions wrap up, stay for the evening drinks reception. It's your chance to connect, collaborate and celebrate with peers who are redefining the future of our industry. So don't miss out. Visit aim.org to save the day, secure your place, and be part of the aim and the next generation manager forum. So let's focus on the allocators then because they are obviously a huge pass at this conversation. And I'll just set the scene with a data point that would be great for you to contextualise and talk around a little bit, which is that in your report, over 90% of allocators said they were satisfied with hedge fund performance last year. Obviously we've partly answered why exactly that is, but that sounds high to me, but from your seat, is that high and can you give us a sense of historical averages and where that sits? It's at the all-time high. It's exactly in line with 2024, but it's at the all-time highs. So to be a little bit more precise, both last year and in 2024, approximately half of allocators, all of that there, hedge fund portfolios had beaten their expectations. About another 40% said they were in line with expectations and then you have sort of 10% who were relatively more disappointed. If you look at the sum of allocators saying that their portfolios had either delivered in line with or beaten their expectations, very most of the seven years before 2024, with the exception of 2020 where obviously there was a downing hedge fund performance against what was a very turbulent market. It was probably trending around the sort of 60 to 70% of allocators being at least satisfied with the level of the hedge fund performance. So if you think about 70 versus 90, it feels pretty good. And that data point, did I hear correct you say that nearly half of allocators in the survey say did they plan to increase hedge fund exposure? And where is that in terms of readings historically? Is that the highest level today? Yes. Yeah, all time high within our data set, which goes back really 10 years at this point in time that we've been running the survey and asking the question in that format. I think it's not just the absolute level of hedge fund interest though that's really worth pointing out, but also just situating that versus all the other asset classes. Because I think over the last few years we've sort of been through these little mini cycles where other other asset classes really came to the fore. I think with the alternatives, there was a period that probably ran to about 2021 where you had a lot of demand for private equity, growth equity, venture capital, then you sort of moved into this era of private credit being really the thing that allocators wanted. And it now feels like it's hedge funds turn in the spotlight. And then that's the alternative piece. We've also seen a fall in demand for traditional assets, right? Whether it's long-only, equities or long-only fixed income, both of those are reading pretty low in terms of demand. So hedge funds stand out, not just in their own inner of themselves in terms of the level of demand for hedge funds, but that level of demand relative to other asset classes is pretty remarkable. So in net basis, it was 45% of investors, 49% want to increase, 4% want to decrease. The next most popular strategy is private equity at 22%. So it's less than half the level. No, it's striking in like to go back to the title of your report, Generation Alpha. It's clearly that that's the driving factor here, right? Hedge funds are delivering in terms of that alpha that's uncorrelated to what investors have elsewhere in the portfolio. So it's a data point that we will watch very closely. And Freddie, some reports have the hedge fund AUM going over five trillion for the first time last year. We promise not to put you too much on the spot if you're not quite accurate here, but do you want to give us a number? Do you want to take a punt on where we might be in 12 months? Well, let me say something first about five trillion. So I agree that the assets managed by hedge funds are over five trillion dollars. But I think what's really important to know, and this is this is something that's changed in the hedge fund industry over the last five to 10 years. Of that, we think it's about five and a half trillion. Of that, three and a half, we think sits within hedge fund strategies and about two sits in non hedge fund strategies managed by hedge fund managers. I think this is a really important distinction that shows you how much the nature of the business model of hedge funds has changed. So the three and a half or so of hedge fund strategies, if you take another performance year that looks like 24 or 23, so another, you know, call it 10 to 12 percent, and then you add inflows to that because the important thing last year as we saw inflows returning, we think the inflows are going to accelerate this year. I think it's not outside of the bounds of probability that by the end of this year, you could be within a sniff of $4 trillion on that hedge fund product site. The non hedge fund products are a little bit harder to size because there's so many different things going on within that. But we do continue to see popularity among investors for many of the other things that hedge funds can do in their portfolios, right? Whether it's long only active extension, private markets, liquid alternatives, co-investments, all these other things that hedge funds are overseed these days. So it feels like that number's just going to continue to drift north. That's very fair. And actually you've been very good to be precise throughout this conversation. So a question I should have asked at the top actually when we were bringing in the allocator piece was to say that of course there are many different subgroups within that demographic. And could you just expand a little bit on the types of investors you're talking about when you're seeing this favoring of hedge funds? Were there any that particularly stood out to you when it comes to that allocation? They're off, for sure. The big story of the last five to seven years has been the relative loss of share of hedge fund assets from pensions. So peak we think pension funds had approaching 40% of hedge fund industry AUM. As of today, we think it's a little less than a quarter, but it's come down pretty substantially. I don't think that's really-- what the easy interpretation would be, oh, pensions have turned away from hedge funds. I don't think it's actually that. I think it's more structural, which is to say the defined benefit pension industry globally is shrinking on the margin, right? There's not new schemes being created. The schemes that exist are oftentimes in a mode of wind down. And then the thing that happened post-2022 was that with rates going higher, a lot of pensions went into fully funded. And as soon as they're fully funded, they start to de-risk their portfolios and move to liability matching rates. They just shift into fixed income. And as a result, we've seen the share of pensions go down. But then at the same time, you've had other situancies that have really leaned into hedge funds and continued to grow, though sovereign wealth funds have grown substantially. The big story, though, I think, of the last few years, and we think this is poised to continue, is the re-emergence of private capital in all its various different forms, right? This is almost a little bit of a kind of back to the future thing, because you went back pre-GFC private capital was the bedrock of hedge fund managers' asset basis. And it's coming back to the fore again. And within that, there's obviously very numerous different constituencies, there's family offices. But actually, we think the forefront of growth now is being driven more by the private banks, the RAAs with the registered investment advisors here in the US, other sort of wealth platforms and intermediaries starting to do more in hedge funds again. So that's really what we see as being the core driver of increased allocations to hedge funds at this point in time. Yeah, we're looking at that also at AIMA in terms of new research that we were taking forward this year is around the family office space. And our hypothesis is that we think the next marginal dollar of capital into hedge fund industry will come from the private capital like you described. And family offices then, in terms of that percentage of the total pie, you say that that has grown, and you think that's likely to continue to grow appetite for the alternative asset class. One is, I think family offices are more mature in their allocation to all in hedge funds. And the second is just the delta in terms of magnitude. So just to give you a sense of comparison, because we sized this up last year for a piece that we wrote on the private wealth. Family offices globally have about $3 trillion worth of AIM. If you look across all the various different private wealth into majories outside of family offices. So private banks, RIAs, the Y houses and broker dealers in the US, and you look at the high net worth client business that they account for is $50 trillion. That constituency put together has more money than pensions, sovereigns, and endowments and foundations all added up. So it's an absolutely gigantic denominator. And the result is, you don't have to move the needle that far on hedge funds that add up to a significant flow of capital in. So the point that we made when we put the report down on wealth is, on average, those constituencies have somewhere between half a percent and one and 1/2 percent of their client assets in hedge funds. A lot of them, if you look at their model portfolios, will have an allocation to hedge funds that's in the 8 to 10 percent range. If you close that delta by even 10 percent, you double the assets that they have in hedge funds. But it's so easy to find more dollars from those investors without having to change too much. Whereas the family office is right, there's an nominated smaller. And I think they just have much more mature allocations to alternatives. But I think it's really about the wealth platforms as the next lego growth for the industry. Well, certainly be keeping a close eye on that. And no doubt we'll be speaking to you about that as well, as this trend starts to strengthen. One other point from me, Freddie, is in terms of where the capital is flowing, you report highlights strong interest in Asia-focused managers. Japan and China were mentioned in the report. In the stock market performance clearly in both Japan and China were among the best in the world last year. And we've seen some notable performance numbers from managers in that region. So what's behind a renewed interest? And how are allocators thinking about the opportunity set in Asia? As you say, the performance was really strong. So last year, our average equity long short climb in Asia was up 28 percent versus 17 percent in the US and 15 percent in Europe. Actually through January, the same has continued again. So Asia was the strongest performing region once again in January. And there's a little bit of push and pull. So I think the pull factor is clearly the performance picture has become much more compelling again. The push factor is we saw last year, for the first time, a pretty substantial pick down in interest in US-focused managers and strategies. I think principally driven by some of the increased uncertainty around the US investment opportunity. We've lived through this long era of American exceptionalism for risk assets. I think investors are starting to ask the question now. As the tide turned, or does it at least make more sense to have a degree in more of geographical diversification? In the first half of 25, our survey date seemed to suggest that that interest was rotating both towards Europe and Asia. In the second half, the interest in Europe seemed to fade again and really Asia into the fall. But also, as you said, there's a few different ways to play that theme. So Japan has seen pretty strong popularity for a couple of years now. And we've seen allocates continue to focus on that. And one particular sort of sub-theme within Japan has obviously been this improved corporate governance story. And there's a number of prominent engagement oriented managers in Japan who I think have done very well there. We've seen interest in China significantly increase, albeit often relatively low base, because in the sort of 22 through 24 period, I think there were some questions asked about the sort of durability of the China opportunities that which seem now to have sort of receded somewhat. And you also see some allocators saying, we're convicted in Asia as a whole, but we don't want to necessarily go so micro on the way that we invest. And as a result, we see robust demand for pan-Asia managers as well who can sort of make those opportunistic pivots between the various different regions as circumstances take. So Freddie, it's still pretty early in the year, but the picture you seem to be painting for us is pretty bullish, which is nice for hedge funds at least. And there seems to be fairly good conditions, market conditions, global, I believe, opportunities to stand out, the right amount of volatility and sort of the good things that the aim of members and your clients will like to see. So as we look out over the year ahead, what are the key themes that you're looking at, what some other research opportunities that you'll be looking into, narratives, particular events that might stand out to you this year? Yeah, so I mean, I think the, as you said, the opportunity set continues to feel pretty rich. January performance really underscored that. I think the strategy that was one of the most sought after coming into this year that did well in 25 and this is off to a pretty outstanding start is discretionary macro. So these environments generally of heightened geopolitical uncertainty increased uncertainty around monetary and fiscal policy across the various different regions. All that goes on with the increased volatility we've been seeing in the commodities markets as well. It's felt like a pretty rich opportunity set for global macro. I think that's likely to continue to be the case. But also, we're clearly in an environment in which there is, there is going to remain heightened dispersion and that is the key, I think, for all hedge fund strategies. If you think about equity law short, we're in an environment in which there is a huge amount of, uncertainty and associated volatility around companies that will be winners and losers from AI. It feels like the obvious trend in the market from the last few weeks. You've obviously seen pretty substantial rotation out of software names. I'd know our clients were generally speaking as underweight software as we've seen them be in many, many years coming into this year already. So if that's just one example of how hedge funds can be positioned to take advantage of these major sort of dislocations and disruptions. So I think on the whole, we continue to be very, very constructive on the opportunity set for hedge funds from an alpha generation perspective. And I think the other thing that's worth saying is, we set today with most equity indices around the world out or close to their all-time highs. It feels like a long time ago, but we also have to remind ourselves of how much value hedge fund managers added in 2022. at the moment at which there was a significant drawdown in risk assets. So, you know, we've come off three very strong years, clearly benign conditions for being long equities and long credit. But at the same time, I think one of the things that really continues to underpin the importance of hedge funds to allocate its portfolios is their ability to nibbly pivot and deliver in those markets where you have a real drawdown. So, you know, if this year winds up not being a significant up year for risk assets again, I think hedge fund allocators will be very dependent on their hedge fund managers to diversify and protect their portfolios. So, I think sort of, you know, whether things go up, whether things go down, I think it's going to be a strong opportunity set for hedge funds to continue to re-unterscal their importance to allocators portfolios. Freddie, it's been fascinating to have you on today. It's great to have you join us and we always look out for this particular report at the start of each year, plenty of things for managers and investors to take from it. So, thank you for joining us today. Thanks, man. The Longshore was brought to you by AIMA, the Alternative Investment Management Association, the Global Representative for the Alternative Investment Industry. As always, you can get the latest episodes by subscribing to Longshore on Spotify, Apple Podcasts, Google Podcasts and Amazon Music, or by streaming episodes directly from our website, AIMA.org. Thanks for listening. [BLANK_AUDIO]