Kristen VanGelder on the Fiftyfaces Podcast

Kristen VanGelder on the alpha-generating opportunities in an environment that’s ​“ripe for change”

We believe hedge funds today enjoy a more diverse and rich set of trading opportunities than they have in several years.

“You have a meaningful cost of capital. There is a lot of uncertainty in terms of the macroeconomic backdrop. You have much higher market volatility and you have less stable cross-asset correlations.” Together, this backdrop ​“favors active management and the flexibility of the hedge fund mandate in particular,” Evanston Capital Management Co-CIO and Partner Kristen VanGelder told the Fiftyfaces Podcast in July 2025. 

Fiftyfaces ​“showcases inspiring professionals in the world of investment and beyond.” While the 34-minute interview spanned VanGelder’s personal and professional life, host Aoifinn Devitt focused the conversation on the current environment for hedge funds.

VanGelder highlighted a resurgence of hedge funds over the last few years, as they continue to serve as diversifiers in an investment portfolio, and she believes they may be capable of reducing overall volatility and protecting against the downside. VanGelder drew a contrast between hedge funds and other alternatives, including private equity and private credit.

Private equity and credit come with ​“some alpha, but they’re still long-only risk-on strategies,” VanGelder said. ​“The reduction in volatility they offer primarily comes from the underlying assets’ liquidity profile and the fact that they’re marked on a lagged or quarterly basis. They’re not truly uncorrelated to economic fundamentals.”

An underestimated risk?

While positive on the hedge fund outlook and anticipating continued growth in the industry, VanGelder raised a risk that the industry — large firms, especially — may be underestimating.

“We’re in what seems to us to be an environment where we’re unusually ripe for change. [To assume] the same usual world or the same historical correlations or relationships between assets, we think, could be dangerous, especially for the most highly leveraged hedge fund strategies that really rely on backward-looking risk models to give them a lot of confidence in their ability to operate at those high levels of leverage.”

“At the same time,” she continued, ​“I think their trading does create a lot more short-term dislocations among individual securities. So, we think investors that do have a longer-term investment horizon can take advantage of those shorter-term price moves and profit from them over time.”