(HedgeCo.Net). The liquid alternatives market appears to be experiencing a structural shift: more institutional investors — including family offices — are turning to “liquid alts” for diversification and risk management, according to a recent industry survey. HedgeCo+1

In the survey, a striking 84% of family-office respondents cited geopolitical uncertainty as a major concern influencing their strategy. As traditional assets like equities and bonds become increasingly correlated and interest-rate and inflation risks linger, many are redirecting allocation toward a mix of illiquid alternatives, cash, foreign assets — and liquid alternatives. HedgeCo Nearly 70% said they’re increasing diversification to better protect downside, with liquid alts emerging as a flexible, “middle-ground” alternative. HedgeCo

This demand reflects broader skepticism of the conventional “60/40” (stocks + bonds) portfolio. With credit-market spreads tight and equity valuations high, investors seeking resilience are looking beyond traditional fixed income or equities for uncorrelated return streams. Home+2CBH+2

What distinguishes liquid alts is their structure: while they deploy sophisticated hedge-fund-style strategies such as long/short equity, market-neutral, managed futures, or multistrategy approaches, they remain accessible through mutual funds or ETFs with daily liquidity — a contrast to traditional hedge funds or private alternative funds, which often demand high minimums and impose lengthy lock-ups. AQR Funds+2Fidelity+2

The shift also shows up in inflows: as of 2025, institutional share-class inflows into liquid alt funds represent nearly half of all net inflows, a sign that allocation gaps between institutional and retail investors are narrowing. HedgeCo+1

Given this backdrop, many asset managers — especially those offering diversified liquid alt strategies — are positioning themselves to grow. With investors increasingly valuing flexibility, transparency, and diversification over pure alpha chase, 2025 may well emerge as a breakout year for liquid alternatives.