The technologies attracting the most investment across the hedge fund industry reveal a great deal about how firms are preparing for the future. According to our recent survey, produced in collaboration with Hedgeweek, managers are concentrating technology investment in a small number of strategic priorities, with implications for operating models, scalability and future growth.
Technology Spending Remains Highly Concentrated
Among funds that increased their budgets, investment priorities are focused on a relatively small number of areas. AI and machine learning account for 32% of stated investment priorities, followed by trading and portfolio management systems at 24% and data infrastructure and analytics at 22%. Together, these categories represent nearly four-fifths of planned technology investment.
By comparison, areas such as investor servicing, regulatory technology and cybersecurity account for a much smaller share of new spending. The findings suggest that firms are concentrating investment in technologies that support core operating processes, decision-making and data management.
From Expansion to Modernization
The nature of technology spending has also evolved. In recent years, many firms focused on expanding technology capabilities and evaluating a broad range of solutions. Today, investment decisions increasingly emphasize integration, efficiency and long-term scalability.
Managers interviewed for the report noted a growing preference for technologies that streamline workflows and work effectively within existing operating environments. Solutions that operate independently of the broader technology ecosystem are receiving greater scrutiny as firms seek to reduce complexity across their technology stacks.
For many organizations, a significant portion of current spending is also being directed toward modernization initiatives rather than entirely new capabilities. Firms are updating legacy applications, retiring outdated systems and addressing accumulated technical debt. While these investments may be less visible than new technology deployments, they often play a critical role in supporting future growth and operational resilience.
Investment Priorities Vary by Fund Size
Technology spending trends also differ across fund segments. More than half of firms managing less than $500 million in assets increased their technology budgets during the past year, while nearly two-thirds of funds in the $500 million to $1 billion range reported increased spending. Among firms managing more than $1 billion, two in five also reported budget growth.
The findings indicate that technology investment remains a priority across the market, regardless of firm size. While investment objectives may differ, managers across all segments continue to allocate resources toward strengthening their operating environments.
New Strategies Create New Technology Demands
For many firms, technology investment is being driven by the operational requirements associated with expanding into new asset classes. Among funds that have added private credit, direct lending or structured products, 73% increased their technology budgets, compared with 54% of firms that have not expanded into those areas.
Managers pursuing these strategies also reported greater operational complexity. Nearly two-thirds encountered unanticipated operational or technology challenges following expansion into less liquid asset classes. These challenges often stem from increased document volumes, more complex workflows and data requirements that differ from those associated with traditional hedge fund strategies.
Technology Spending Reflects Operational Reality
Our report highlights a broader shift in how firms are approaching technology investment. While AI continues to attract significant attention, the primary drivers of spending are often more fundamental. Expanding strategy sets, growing data requirements and increasing operational complexity are placing new demands on technology environments across the industry.
As hedge funds continue to evolve, technology investment is increasingly focused on strengthening the operational foundations required to support growth, scalability and more sophisticated investment strategies.
To learn more about how hedge funds are prioritizing their technology investing, download the report.