HEDGEWEEK® CIO SENTIMENT REVIEW 2025 OCTOBER
ALPHA HUNTING
EXECUTIVE SUMMARY
Jim Simons once observed that times “when everyone is running around like a chicken with its head cut off” tend to be “pretty good for us.” The legendary quant wasn’t speaking metaphorically. He meant it literally: chaos creates opportunity for those positioned to exploit it.
Early 2025 has delivered chaos in abundance. Wars grind on across multiple continents. Tariffs swing wildly, reshaping supply chains almost weekly. Inflation refuses to behave as central banks predicted. Technology stocks that seemed untouchable six months ago have shed billions in value. A single social media post (authentic or fabricated) moves markets more than quarterly earnings reports used to do.
Ask 50 hedge fund chief investment officers whether this qualifies as unprecedented, and you’ll get a split verdict. Nearly a third see no historical parallel. Others invoke the dot-com unwind or 1970s stagflation.
But ask whether they see opportunity, and the consensus becomes overwhelming. Over 90% express bullish sentiment on alpha generation, with more than a third “extremely bullish.” Nearly six in ten maintain high or maximum conviction in their portfolios. Precisely zero describe themselves as defensive.
This report examines why. What do hedge fund CIOs currently see that others are missing? How is artificial intelligence creating a performance chasm between early adopters and sceptics? Why are North American funds viewing Trump 2.0 so differently from their European counterparts? And what does it mean when the people managing institutional capital care less about whether markets are unprecedented than about whether they’re exploitable?
MANAS PRATAP SINGH
The key source of data in this report is the Hedgeweek® CIO Survey conducted in January 2025. Over 50 chief investment officers participated, representing hedge funds across major global domiciles, strategy types, and AUM categories. Further insights were gathered during interviews in January 2025 with both named and unnamed sources, as well as through additional market intelligence.
FUND AUM DISTRIBUTION
PART I: UNAPOLOGETICALLY BULLISH
CIOs share their sentiment, positioning and discuss historic precedents ahead of 2026
THE PSYCHOLOGY OF NINE IN TEN
When nine out of ten CIOs managing institutional capital express bullish sentiment in an environment most would describe as chaotic, the data demands explanation. Either these managers are seeing opportunities that others miss, or they’re positioning based on a fundamentally different understanding of how markets generate returns during periods of dislocation.
Start with positioning. 58% maintain high or maximum conviction. One in ten operate at maximum conviction with concentrated bets. 7% describe themselves as cautious. Zero per cent are defensive.
“Clients are no longer paying simply for market exposure,” explains Ryan Kanaley, chief investment officer at New York-based Overbrook Management Corporation. “They expect managers to justify their fees with demonstrable, net-of-cost alpha.
That dynamic forces more discipline and, ironically, creates more mispricings for those willing to be patient and differentiated.”
The confidence has texture when you break it regionally. European CIOs, who’ve spent years navigating Brexit uncertainty, energy crises, and perpetual euro-zone drama, universally express bullish views. North American funds clock 86%, while Asia-Pacific managers maintain similar conviction levels.
An $8bn multi-strategy CIO explains the mindset: “The greatest opportunities emerge when others are paralysed by uncertainty. Right now, we’re seeing mispricing everywhere. Not because fundamentals have broken down, but because passive flows and algorithmic trading are overwhelming price discovery.”
Chart 1 Alpha Generation Outlook
Maximum conviction
Chart 2 Portfolio Positioning Stance
THE PRECEDENT TRAP
One question annoys hedge fund managers more than almost any other in early 2025: Are markets truly unprecedented?
Newspapers deploy the word to scare readers. Commentators use it to sensationalise the mundane. Central bankers invoke it to excuse policy failures. So we asked the people actually allocating billions to settle this. Does experience, data, or historical pattern recognition suggest we’re in genuinely uncharted waters?
The answers split almost perfectly down the middle, which itself tells a story.
Just over a quarter (28%) see no historical parallel whatsoever. Another 28% draw direct comparisons to the dot-com unwind, when euphoria met reality and the subsequent repricing created years of opportunities for skilled short-sellers and value hunters.
13% reach back to 1970s stagflation. Nearly one in ten invoke 1987’s volatility regime. Another 8% cite 2020’s pandemic shock. 18% reference other periods entirely, often combining elements from multiple historical episodes.
Igor Yelnik, who runs Alphidence Capital and has navigated multiple cycles, puts it plainly:
“The market is always different, but there are some parallels.” He flags late 1970s inflation and central bank intervention. But crucially, he’s not using history as a warning. He’s using it as a playbook.
But here’s what matters: the CIOs who see no historical parallel are positioning just as aggressively as those invoking dot-com or stagflation playbooks. The historical debate is academic. The forward positioning is unanimous.
Kanaley frames the precedent question differently: “What feels unprecedented is the simultaneity: AI’s disruptive potential colliding with geopolitical fragmentation, record fiscal spending, and a more constrained monetary policy toolkit. We’ve seen elements of this before (productivity booms, wars, fiscal cycles) but rarely all at once.” Traditional frameworks aren’t obsolete, he argues, but they require recalibration. Backtests have shorter half-lives. The components are familiar. The combination and velocity aren’t.
Whether markets are unprecedented or merely unfamiliar misses the point. CIOs are treating uncertainty as a product. They’re paid to monetise it.
What feels unprecedented is the simultaneity: AI’s disruptive potential colliding with geopolitical fragmentation, record fiscal spending, and a more constrained monetary policy toolkit. We’ve seen elements of this before — productivity booms, wars, fiscal cycles — but rarely all at once.
RYAN KANALEY Chief Investment Officer, Overbrook Management Corporation “
WHAT SEPARATES WINNERS FROM LOSERS
When we asked CIOs to name the single attribute that will separate winning from losing funds in 2025, we expected platitudes about research quality or risk management. What we got instead was revealing.
“Flexibility” and “adaptability” were the most frequently mentioned responses. Not conviction (though that matters). Not intelligence (table stakes). But the ability to pivot when evidence changes. To maintain positions through volatility when others panic. To abandon their thesis when data contradicts them.
“Risk discipline” followed closely. “Patience” appeared surprisingly often, suggesting CIOs anticipate extended periods where simply not doing something stupid will generate alpha versus competitors chasing momentum.
Other responses revealed nuance, including “technological edge,” “information edge,” and “disciplined theses.” One wrote simply “flexibility and risk management,” refusing to choose.
A European macro specialist frames it: “The hedge funds that thrive aren’t necessarily the smartest or best-connected. They’re the ones who can maintain conviction when everyone else panics, and remain flexible when everyone else is anchored to yesterday’s thesis.”
Phrases cited by CIOs when asked what separates winning from losing funds
TECHNOLOGICAL EDGE
FLEXIBILITY & ADAPTABILITY RISK DISCIPLINE PATIENCE
YASHAR JEDARI
Senior Director, International Financial Services
Yashar Jedari is an accomplished Sales Leader and currently serves as Head of International Financial Services Sales at AlphaSense, where he oversees the firm’s rapid commercial expansion across EMEA and APAC. With over 22 years of experience in Data, Analytics, Research, and SaaS sales, Yashar is known for building and scaling high-performance teams that consistently exceed revenue targets in competitive international markets. His leadership is defined by a strong growth mindset and a deep understanding of enterprise sales dynamics across global financial services.
What separates CIOs who thrive on information abundance from those paralysed by it?
It’s not about who has more data — it’s about who has more discipline. The CIOs who thrive have built clear information architectures that turn noise into narrative. They’ve learned to automate the repetitive and focus human attention where it adds conviction. At AlphaSense, we see this daily: the difference isn’t data access, it’s information design. You have to have effective tools to make sense of large amounts of data, particularly if it’s unstructured qualitative information, otherwise you will be at a disadvantage.
When every fund has Bloomberg and Reuters, where can hedge fund CIOs find genuine information edge?
Edge now lies in discovering what others overlook. The firms that consistently outperform are identifying early signals — in management commentary, expert interviews, or local disclosures — and connecting them to global themes faster than competitors. AlphaSense helps accelerate that discovery process, giving funds the ability to spot non-
consensus insight before it becomes priced in. AlphaSense’s market leading AI allows our users to cut through noise more efficiently than any other similar product. This allows them to spend time doing research rather than looking for information hidden in masses of documents. You can imagine in particular how useful this is when dealing with qualitative unstructured information.
How are winning funds verifying “facts” in an era of misinformation?
They’ve operationalised fact-checking. CIOs are now building workflows that automatically triangulate across filings, transcripts, and third-party commentary — reducing human bias and speeding up validation. AlphaSense plays a key role here by centralising diverse, trusted sources in one searchable environment, enabling instant cross-reference using conversational generative AI.
Beyond English-language sources, how are global funds accessing local intelligence that actually matters?
Multilingual visibility has become essential. The most advanced funds are capturing insights directly from local markets — often before they’re translated or syndicated. With AlphaSense’s language coverage and AIpowered translation, investors can surface material developments from Tokyo to São Paulo in real time, leveling the playing field across geographies.
Trump, tariffs, deglobalisation — how are CIOs rebuilding information architecture for a fractured world?
They’re prioritising adaptability. Rigid data stacks no longer work in a world where policy, regulation, and supply chains shift overnight. Many CIOs are turning to flexible intelligence platforms like AlphaSense that can expand or pivot coverage instantly, ensuring teams stay aligned to fast-changing global narratives.
YASHAR JEDARI
Senior Director, International Financial Services
With shifting U.S. policy, what types of intelligence are CIOs prioritising — legislative tracking, regulatory monitoring, or trade flow analysis?
All of the above, but emphasis depends on exposure. Macro funds are monitoring policy language and central-bank tone; sectorfocused funds are watching trade, regulation, and supply-chain chatter. AlphaSense enables both by consolidating those data streams — giving CIOs a single pane of glass on global market drivers.
What’s the optimal information stack for a $5B fund versus a $500M fund?
A $5B fund typically needs integration and compliance — connecting intelligence into research management systems and internal models. A $500M fund seeks leverage — enterprise-grade insight without enterpriselevel overhead. AlphaSense supports both ends of that spectrum: scalable for the large, turnkey for the agile. What is clear is that if either fails to employ a smart generative AI overlay on their internal and external information sets they will be falling behind their competition.
As funds prepare for potential correlation breakdowns, what early warning signals are they monitoring through intelligence platforms?
They’re watching language drift — subtle changes in management tone, risk language, or sentiment that precede market shifts. AlphaSense’s sentiment analysis and transcript search make it possible to identify these early inflection points long before they show up in prices. They are looking for unique data sets and unique opinions that differentiate from the crowd. AlphaSense has a vast proprietary expert transcript library- which is a perfect example of that kind of content
Looking to 2026, what capabilities will separate winning CIOs from everyone else?
Speed, synthesis, and source diversity. The best CIOs will combine human insight with AIpowered discovery to move from reaction to anticipation. Information abundance rewards clarity — and that’s the edge AlphaSense is built to deliver.
Speed, synthesis, and source diversity. The best CIOs will combine human insight with AI-powered discovery to move from reaction to anticipation. “
PART II: FRACTURE LINES AND FORWARD BETS
Global investment officers on technology, Trump and talent
THE AI DIVIDE: TWO INDUSTRIES DIVERGING
Just over one in four CIOs (29%) report significant process enhancement from AI. One in ten describes the impact as game-changing. But 13% report no impact whatsoever, insisting human insight still dominates. Another 8% see only marginal effects.
The divide runs along predictable strategy lines but also surprising geographic ones. Multi-strategy funds treat AI as existential. Systematic managers view it as the next evolution of quantitative approaches they’ve been building for decades. But long/short equity managers (particularly in North America and Europe) remain deeply sceptical.
Kanaley explains why the technology divide follows predictable lines: “Multi-strats are structurally better positioned to adopt AI: they have scale, centralized infrastructure, and the ability to test at portfolio level. Traditional long/short funds are often leaner and more dependent on the judgment of individual PMs, making adoption slower.”
The scepticism from discretionary managers isn’t irrational. Interpretability, risk management, and model overfitting present real challenges. But Kanaley doesn’t see the gap as permanent: “The winners will be those who integrate AI into decision-making without losing economic intuition.” The question isn’t whether to adopt AI, but how to implement it without sacrificing the judgment that made
managers successful in the first place.
For now, the structural advantages favour systematic and multi-strategy approaches. Whether discretionary long/short equity managers can close the gap or whether their scepticism proves prescient will likely determine performance dispersion over the next five years.
TRUMP 2.0: THE ATLANTIC DIVIDE
The return of the Trump administration is creating one of the starkest regional divides in hedge fund positioning we’ve seen in years. Not because European and North American CIOs disagree about policy direction, but because they’re operating under fundamentally different regulatory regimes that are now moving in opposite directions.
Seven in ten CIOs view Trump 2.0 favourably, but that headline number obscures a more interesting story. North American funds clock 74% positive sentiment. European funds sit at 57%. That 17-percentage-point gap matters.
For North American hedge funds, the regulatory environment has whipsawed. The Biden administration spent years tightening oversight, increasing compliance burdens, and generally making life harder for alternative managers. Trump’s return represents not just a policy change but a policy reversal. 17% of North American CIOs see “significant opportunity”.
Game-changer
Significant enhancement
Useful for specific tasks
Still evaluating
Chart 7 AI/Machine Learning Impact
European funds view the situation more warily. They’re not dealing with regulatory reversal. They’re dealing with policy uncertainty that crosses borders. Fifty-seven percent positive sentiment still represents optimism, but it’s cautious optimism hedged with concern about tariff escalation and transatlantic relations.
Roughly one in five CIOs overall adopt a waitand-see stance. These clusters are heavily concentrated in Europe and the Asia-Pacific region, reflecting geographic distance from the policy epicentre. Only 10% view the administration negatively, with this sentiment concentrated among European macro and event-driven managers who are concerned about geopolitical stability.
What’s striking isn’t that North American funds are more bullish (that’s predictable) but why they’re bullish. This doesn’t seem ideological. They seem to care about exploitability. The geopolitical and regulatory pendulum swinging creates friction, and friction creates opportunity for managers positioned to capture it.
“Optimism stems less from politics per se and more from the policy toolkit: targeted fiscal investment in infrastructure and technology, deregulation in select industries, and volatility around tax and trade policy,” Kanaley notes. “These shifts create dispersion that active managers can exploit.”
The most attractive alpha opportunities, in his view, “will be in sectors where policy acts as a catalyst for re-rating”. This includes industrials, healthcare, and certain areas of energy transition.
STRUCTURE CRACKS: WHERE THE NEXT BREAK HAPPENS
Despite aggressive positioning, CIOs identify structural vulnerabilities that keep them awake at night. Not because they fear losing money (volatility is profitable for skilled managers) but because they recognise certain breaks could cascade faster than anyone can trade around them.
19% cite passive flows overwhelming fundamentals as their primary concern.
This isn’t an abstract worry. Index funds now mechanically deploy hundreds of billions regardless of valuation. When price discovery deteriorates, mispricings widen. Markets can stay irrational longer than textbooks suggest.
Another one in five worries about liquidity evaporating during stress events and credit markets freezing, with concerns at 16%.”The next crisis won’t look like the last one,” warns a distressed credit specialist managing $9bn. “Everyone’s preparing for liquidity to vanish in equity markets, but I think credit freezes first. And when it does, the repricing will be violent.”
Chart 5 Trump Administration Impact
Chart 6 Trump Impact by Region
Currency wars round out top concerns at similar levels, particularly among European CIOs.
These concerns don’t contradict bullish positioning. They explain it. CIOs anticipate structural stress creating precisely the kind of dislocations that generate alpha for managers positioned correctly. Risk and opportunity aren’t opposites. They’re the same phenomenon viewed from different angles.
MISPRICING: THE OPPORTUNITY MAP
CIOs identify specific disconnects between market pricing and fundamental reality. These aren’t vague concerns. These are actionable mispricings they’re positioning around.
Central bank credibility tops the list at 21%. After years of pivoting between hawkish and dovish guidance, market faith in monetary authorities has eroded. Forward guidance has become backwards-looking. Inflation expectations embed assumptions about central bank competence that may prove optimistic.
Inflation expectations themselves draw 18% concern. Markets are pricing central banks’ stated targets, not their demonstrated track record. Credit quality assessment garners equal attention at 18%. Spreads aren’t compensating for default risk in a sustained higher-rate environment. When reality intrudes, the repricing will create opportunities.
Chart 8 Market Structure Concerns
Technology valuations concern only 15%, surprisingly modest given recent volatility. “Tech valuations aren’t universally stretched,” explains a long/short equity specialist. “We’re seeing massive dispersion. Some names are absurdly overvalued, others materially cheap. That dispersion is exactly what we want.”
Recession probability garners equal weight at 15%. Markets are pricing a soft landing as the base case. CIOs aren’t so sure.
Even with geopolitics dominating the front pages, it appears relegated to page two or three of whatever CIOs are reading. Geopolitical risk concerns only one in ten CIOs.
RESOURCE ALLOCATION: BUILDING THE EDGE
Ask CIOs where they’re pushing their CEOs to invest and priorities clarify immediately. Next-generation talent leads at 21%, tied with more quantitative firepower. The pairing isn’t coincidental.
Kanaley explains why: “The information edge has shifted. Successful PMs of the future won’t just be stock pickers; they’ll be hybrid operators who can interrogate models, understand data pipelines, and translate that into investment theses clients can believe in. Equally, the human element (judgment, creativity, and the ability to manage risk through uncertainty) remains irreplaceable. We’re investing heavily in both dimensions.”
This describes the talent scarcity problem. Funds need professionals who bridge quantitative sophistication and economic intuition. Neither dimension alone suffices.
Deeper sector expertise follows at 18%.
As markets become increasingly complex, generalists seem to be losing ground to specialists who have a granular understanding of specific industries. The edge migrates from breadth to depth.
Faster data and information systems garner 13%. Speed matters in crowded trades. Stronger risk management tools concern 11%. Enhanced liquidity management and regional presence each draw 5%. Better geopolitical intelligence garners only 8%.
“Tech valuations aren’t universally stretched” “
LOOKING FORWARD
When Igor Yelnik describes the mood amongst his peers, he confirms: “The mood is generally good.” Then immediately: “The greatest concern among my peers is asset raising.”
There’s the paradox in a sentence.
CIOs aren’t worried about generating alpha in current markets. They’re confident that environments like this reward skill.
The challenge is convincing allocators of that. Institutional capital moves slowly. Many in that space view chaos and recommend a defensive approach. They’re fighting the last war whilst CIOs hunt opportunities in the current one.
As markets navigate policy uncertainty, technological disruption and geopolitical realignment, hedge funds occupy advantaged positions. Their structural flexibility, sophisticated risk management, and ability to profit from dislocations regardless of direction position them for precisely this environment.
The CIOs we surveyed aren’t hoping for alpha generation opportunities. They’re aggressively positioned to capture them. Whether conviction proves prescient or premature, one certainty emerges: hedge funds are playing offense even as much of the investment world hunkers down defensively.
The chaos has arrived. Now we’ll see who capitalises on it.
CONTRIBUTORS: Manas Pratap Singh Head of Hedge Fund Research manas.singh@globalfundmedia.com FOR SPONSORSHIP & COMMERCIAL ENQUIRIES: Please contact sales@globalfundmedia.com