Standard Chartered is encouraging wealth management clients to allocate part of their portfolios to hedge funds as investors seek greater diversification and protection from heightened market volatility, a senior executive at the Asia-focused bank told Reuters.
The strategy comes as demand for alternative investments accelerates globally and Standard Chartered seeks to capitalize on the growing pool of affluent and high-net-worth individuals across Asia.
Samir Subberwal, the bank’s global head of wealth solutions, retail products, data and analytics, said hedge funds could provide clients with returns that are less dependent on the direction of traditional equity and bond markets.
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“I think this is a good product to offer to clients as something that gives them a little bit of a hedge and stable returns,” Subberwal said.
He said strategies including equity market-neutral funds and multi-strategy funds of hedge funds were particularly suited to investors looking to reduce their exposure to sharp movements in conventional asset classes.
“Hedge fund strategies, such as equity market neutral and multi-strategy fund of hedge funds, have a clear focus on generating positive, lowly correlated absolute returns and can help investors navigate choppy markets,” Subberwal said. “The performance of these hedge funds have actually been quite resilient over the last few years.”
The push comes as hedge funds are attracting larger pools of capital from investors looking beyond the traditional 60/40 portfolio of stocks and bonds.
Global hedge funds generated an average return of 7% in the first six months of 2026, substantially above their 10-year average return of 4.1%, according to a Goldman Sachs note cited by Reuters.
Industry data from Hedge Fund Research showed that hedge fund assets under management increased by a record $409 billion in the second quarter, reaching $5.6 trillion.
The growth suggests that institutional and wealthy investors are increasingly willing to pay for strategies designed to generate returns across different market conditions rather than relying primarily on rising equity markets.
For Standard Chartered, the opportunity is also closely tied to the expansion of its wealth management business. The bank reported better-than-expected first-half profit last month, helped by a 38% increase in wealth income. Demand for investment products increased by double digits, while higher client inflows and an increase in new accounts contributed to the division’s growth.
Market volatility has been an important driver of that demand. Rather than simply prompting investors to retreat to cash, periods of uncertainty have encouraged wealthy clients to seek professional advice and diversify across a broader range of products.
Subberwal said managed investments, including public funds and variable capital companies, structured products and cash equities were among the strongest-performing areas of Standard Chartered’s wealth business.
Hedge funds are now being positioned as another component of that product offering.
“Hedge fund allocations will be a key focus for us,” Subberwal said. “It is about completing the suite of products so we can help clients diversify their portfolios and be able to manage the volatility of markets much better.”
The approach emerges from a broader shift in wealth management as investors confront a combination of elevated asset valuations, geopolitical risks, uncertainty over interest rates and concerns about inflation. Alternative investments can potentially reduce portfolio dependence on conventional markets, although hedge funds also carry higher fees, complex strategies and liquidity restrictions that can make them unsuitable for some investors.
Standard Chartered’s emphasis on hedge funds also fits its geographic strategy. The bank has a significant presence across Asia and the Middle East, regions where the number of affluent investors has expanded rapidly and where demand for sophisticated investment products is increasing.
The challenge for the bank will be to convert that growing wealth pool into sustainable fee income while ensuring that alternative investments are appropriately matched to clients’ risk tolerance, liquidity requirements and investment objectives.
The expansion of private-bank distribution networks such as Standard Chartered’s provides hedge fund managers access to a much wider pool of individual wealth. For the bank, offering these strategies gives clients another way to position portfolios as markets become less predictable.
Against that backdrop, analysts see the growing allocation to hedge funds as representing more than a search for higher returns. It is believed to be a signal of an increasing willingness among wealthy investors to pay for diversification and strategies designed to reduce dependence on the direction of global stock and bond markets.