Artificial intelligence has been one of the main market drivers, bolstering the performance not only of traditional assets but also of alternative instruments such as hedge funds with exposure to the sector. Here, Kier Boley, Co-Head and CIO of UBP Alternative Investment Solutions (AIS), shares his insights into the issue.
‘The artificial intelligence theme has developed primarily in the equity markets; consequently, the hedge fund strategies that have benefited most from the rally have been long/short equity strategies,’ Boley points out. ‘More specifically, those who have benefited are US-based managers specialising in the tech sector, and who have been able to invest across the entire life cycle of the theme, in both private and listed equity markets. Asia-focused managers have also reaped rewards from the trend, having identified the positive impact of AI on memory manufacturers in South Korea and Japan, and taking long positions in companies such as Samsung.’
Indeed, while traditional equities focus primarily on US tech, it is UBP’s view that, in hedge funds, performance is driven above all by the tech sector in Asia, which continues to drive the outperformance of long/short equity strategies compared with their more generalist counterparts which cover all sectors
‘The most direct exposure to the artificial intelligence theme is therefore achieved through long/short equity managers specialising in the tech sector, given that since the start of the year the trend has developed mainly in large-cap shares,’ continues Boley. ‘A second approach involves investing with managers capable of allocating capital to venture capital/growth equity strategies while the companies remain private, and then benefiting from the IPOs scheduled for 2026.’
The most direct exposure to the artificial intelligence theme is therefore achieved through long/short equity managers specialising in the tech sector, given that since the start of the year the trend has developed mainly in large-cap shares
At the same time, within the fixed-income universe, convertible bond arbitrage strategies are among the main beneficiaries of investor demand for the artificial intelligence sector, as issuers can offer low-coupon bonds with the opportunity to convert them into shares, given the high levels of share price volatility.
‘On the bond front, we find the convertible segment attractive, as higher interest rates are prompting companies to issue more convertible bonds rather than traditional high-yield bonds, which carry a higher coupon,’ Boley emphasises. ‘The increase in bond supply makes issue prices more attractive to investors and also leads to a fall in the valuations of bonds already trading on the secondary market. In convertible bond arbitrage strategies, the hedge consists of taking a short position in the issuing company’s share. Companies currently issuing these bonds (typically in the healthcare and technology sectors) often have highly volatile share prices, and the greater the volatility of the shares, the greater the opportunities for the hedge fund to turn a profit by trading them.’
‘Furthermore, although the convertible bond market is still predominantly made up of US issuers, we are seeing an increase in issuances by non-US companies. This helps to broaden investment opportunities and the scope for diversification,’ adds Boley.
Looking ahead, according to the UBP expert, investors should consider how the artificial intelligence theme will gradually expand to other sectors. ‘Two strategies that could capitalise on this shift are tech fund managers focused on mid-caps, and those investing in the energy sector, given the growing demand for electricity needed to support the development of artificial intelligence,’ concludes Boley.
For Professional Investors in Switzerland or Professional Investors as defined by the relevant laws. Investments in hedge funds involve significant risks, including the risk of illiquidity, of loss of capital, strategy‑specific and leverage related-risks.
The opinions expressed herein are correct as at 23 July 2026 and are subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding any particular fund, strategy or security. Past performance is not a guide to current or future results. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.
The views and opinions expressed by fund managers (internal or external) may differ from the house view. They are shared for informational purposes and do not constitute investment advice or a recommendation.
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