Marex’s latest research report, “Stacking Up: Emerging Manager Survey 2026,” co-authored with the Alternative Investment Management Association (AIMA), offers a timely snapshot of the evolving emerging manager landscape. Drawing on insights from 180 hedge fund managers overseeing up to US$1 billion in assets, alongside 50 institutional investors, the report explores the operational and strategic priorities shaping the sector - from fee structures and cost efficiency to the growing influence of AI and the rise of Separately Managed Accounts (SMAs).

The results suggest a sector that continues to mature, with emerging managers increasingly adopting institutional-grade infrastructure and governance earlier in their lifecycle. At the same time, investors appear more adaptable in their allocation approach, showing greater flexibility around factors such as fund size and track record, while maintaining high expectations for operational strength. Together, these trends point to a market gaining confidence and momentum, supported by a more pragmatic and opportunity-focused investor base.

1. The smallest managers are scaling faster – but there is growth at all levels

“Stacking Up” - a reference to the many indicators collectively pointing to renewed momentum across the industry - is the fifth edition of the Emerging Managers Survey published over the last nine years. The breadth and consistency of the data provide a unique lens into the evolution of the emerging manager ecosystem, highlighting how operational priorities, investor expectations, and growth dynamics have shifted over time.

One of the clear themes to emerge from this year’s findings is the declining share of managers remaining below the US$100 million AUM threshold for more than five years. This points to an environment in which smaller and earlier-stage funds are scaling more efficiently, supported by investors’ increasing willingness to allocate capital earlier in a manager’s lifecycle.

Funds 5+ yrs old by AUM category
 

2. Institutional mindsets are driving success — but raising the cost base

This is a market in which allocators value robust infrastructure, governance, and operational discipline, with 86% of investors from this study citing Operational Due Diligence (ODD) as the biggest barrier to allocation.

Reflecting this, the findings reinforce a clear message that managers are prioritising institutional mindset from day-one. Firms are investing earlier in infrastructure and in-house capabilities, resulting in higher headcount. Emerging managers now have an average of 10 people in their businesses, up from 7 in the previous survey. 

While this investment is helping firms meet allocator expectations and scale more effectively, it is also increasing the cost of building a sustainable business. Average breakeven has risen by almost a fifth to US$82.9m. A more demanding regulatory environment is likely to be contributing to this increase, alongside rising competition for talent and higher service provider costs.  

More institutional operating models are increasing business breakeven levels

3. Operating costs are stabilising – but economies of scale remain critical

Average fund operating costs have stabilised at approximately 1% (total expense ratio), suggesting managers are succeeding in containing expense growth despite ongoing inflationary pressures. For many emerging managers, long-term profitability therefore remains heavily dependent on both asset growth and sustained investment performance.

4. Fundraising is a challenge – but investor attitudes are evolving

While fundraising remains a significant challenge across the industry, investors are increasingly open to backing managers with shorter track records. Managers are still expected to demonstrate institutional-quality platforms, operational robustness and clear strategic differentiation from an early stage.

Encouragingly, if funds are able to meet these expectations, they are being considered for investment earlier, and once investors engage, the average time required to close a new allocation has shortened, proving that managers are meeting higher expectations.

Allocators are investing in emerging managers earlier

5. Fee competition is strong – but fees are holding up

Both management fees and performance fees have continued to hold up. Management fees average 1.43% across respondents, with 13% of emerging managers now charging management fees of 2% or higher, while funds launched within the past 12 months reported average management fees of 1.33%. Performance fees rose very slightly from 16.22% in the 2024 survey to 16.24% in this year’s survey.

Although fee competition remains intense, particularly among early-stage managers, another notable trend is that firms are increasingly using mechanisms designed to better align interests with investors.

The use of hurdle rates has risen meaningfully, especially among newer firms. More complex alignment tools such as clawback provisions remain more common among larger managers. More than one-third of LPs (36%) now use a hurdle rate, up from 21% when the same question was asked in 2022.

6. AI adoption is accelerating — even if investors are not demanding it

For the first time, this year’s research examined attitudes towards AI. The findings suggest managers are embracing AI more rapidly than investors are explicitly requiring it. When asked whether it is important for hedge funds to use AI tools, around one-third (34%) of investors said they primarily assess managers based on their investment offering, pedigree, and opportunity set, with AI not viewed as a core consideration. Only 8% said they actively expect firms to use AI tools, whether for operational efficiencies or alpha generation. The majority of investors (58%) took a more pragmatic position, indicating that while AI is not a deciding factor, they would expect managers to utilise it where clear use cases exist.

7. A more flexible approach to scaling – but growing AUM with reliable partners is key

Managers are demonstrating greater flexibility in how they scale their businesses, including increased openness towards managed accounts and onshore fund structures. While two thirds of investors (66%) favour commingled vehicles as their preferred method of allocating to emerging hedge funds, managers are becoming increasingly pragmatic in accommodating a broader range of investor preferences.

Two-fifths of surveyed emerging managers indicated they are largely ambivalent between using between commingled funds and SMAs, they are just keen to grow AUM with reliable partners.

Manager flexibility: Manager fundraising priority in 2026

Investors were asked: What is your preferred method of allocating to emerging hedge funds?

Stacking up: emerging manager survey 2026

This year’s survey presents a notably positive outlook despite a challenging market backdrop. Emerging managers are struggling less in respect of scaling up AUM, they are expanding headcount, and containing fund costs effectively. Investor attitudes are also evolving: track record requirements are becoming less onerous, funds are being considered for investment earlier, and investment decisions are being made more quickly. For emerging managers with the resilience, operational discipline, and differentiated insights required to succeed, the opportunity set remains substantial in what continues to be one of the industry’s most competitive segments.

Data for both the fund manager and allocator surveys were gathered between 1 March -10 April 2026. Responses reflect the global alternative investment industry, with North America (29%), the UK (27%), Europe (14%) Asia-Pacific (26%) and ROW (3%). The report also breaks down findings by region and investment strategy to provide a more granular view of how trends differ across the respondent base.

To download a copy of the report, please visit this link.