Hedge funds reduce North America exposure as dollar weakens

Prime broker reports and industry sources say demand for North America-focused hedge fund strategies fell over the past year, while allocations to Asia and Europe increased.

Reports from several major prime brokerages and anonymous industry sources indicate hedge funds have trimmed exposure to North America over the past year. The move is discussed in the context of U.S. policy uncertainty, a weakening dollar and a pullback in large U.S. megacap stocks. Asia and Europe drew stronger investor interest through 2025, while industry-wide assets remained above $5 trillion at year-end. Key facts: - Multiple prime broker reports, including from Goldman Sachs, JPMorgan and BNP Paribas, reported lower demand for North America-focused hedge fund strategies during 2025. - Goldman data showed Asia allocations were up 13% on a net basis at the start of the year versus 7% a year earlier, while North America allocations rose 7% compared with a 14% increase at the start of last year. - BNP Paribas reported a net 30% of allocators added hedge fund exposure to Europe in 2025, and a net 23% added to North America-focused strategies, down from 39% in 2024. - The article mentions long/short funds reduced positions in the so-called "Magnificent Seven" megacap stocks, and Hedge Fund Research reported industry assets exceeded $5 trillion at year-end. Summary: Reports point to a trend of more balanced regional allocations, with stronger interest in Asia and Europe and slower growth in North America-focused allocations. Whether this will produce a sustained reallocation away from North America is undetermined at this time.