2026 Hedge Fund Outlook

Markets may appear orderly heading into 2026 — but beneath the surface, risk and opportunity are becoming increasingly uneven. 

About the Report

• Evanston Capital’s annual assessment of dynamics reshaping hedge fund opportunities and risks, authored by Evanston’s Co-CIOs Adam Blitz and Kristen VanGelder
• This year’s report emphasizes an environment that strongly favors hedge fund managers who can extract value from dispersion and identify specific pockets of dislocation rather than riding broad market beta
• Outlooks for all four major strategy categories: Long/Short Equity, Event Driven, Global Macro and Relative Value
• Designed for institutional investors and financial professionals seeking a clear, strategy-by-strategy framework for navigating hedge fund allocations in the year ahead 

Download now

Elevated equity valuations, concentrated indices, and credit spreads near historic lows are masking a market defined by dispersion, dislocation, and fragile liquidity. 

At the same time, the competitive landscape has shifted: capital has consolidated, time horizons have shortened, and fewer managers are positioned to exploit complex, less liquid opportunities. This combination strongly favors specialized managers with deep expertise.

“There is less competition today than in years past for differentiated, specialist managers who possess deep knowledge of their universe to add alpha.”

–Kristen VanGelder, Co-Chief Investment Officer

Evanston Capital’s 2026 Hedge Fund Outlook is our annual assessment of how these dynamics are reshaping hedge fund opportunity sets, based on extensive research across leading and emerging managers. 

Strategy Highlights for 2026

• Long/Short Equity. A true stock-picker’s market emerges as dispersion widens, short rebates improve, and alpha becomes more balanced between longs and shorts — making portfolio construction and liquidity discipline critical.
• Event Driven. Corporate activity is poised to continue into 2026, while credit-rating dispersion and leveraged-loan dynamics create selective opportunities beneath expensive index-level pricing.
• Global Macro. Deglobalization, policy uncertainty, and shifting correlations are generating a richer and more fragmented opportunity set — favoring discretionary, multi-asset macro managers.
• Relative Value. Specialized, capacity-constrained strategies — including convertibles, catastrophe reinsurance, and volatility — offer differentiated return potential where crowding remains limited. 

Co-CIOs Adam Blitz, CFA and Kristen VanGelder, CFA