[ A L G O R I T H M I C T R A D I N G S U R V E Y ]
Execution alpha:
Hedge funds raise the bar
for algorithmic trading
Record assets, rising technology budgets and growing demands for best execution are intensifying the competition for execution alpha. The TRADE ' s 2026 Algorithmic Trading Survey provides insight into the changing priorities of hedge funds, from algorithmic trading adoption to provider selection amid growing market complexity.
According to Hedge Fund Research( HFR), hedge fund industry assets under management surpassed the $ 5 trillion mark for the first time in 2025, ending the year at a record $ 5.15 trillion following a $ 642.8 billion increase in industry capital. The sector enters 2026 with strong momentum, supported by the highest level of net inflows in almost two decades and continued institutional interest in alternative investment strategies. Performance dispersion across strategies has narrowed, giving allocators greater confidence in deploying capital across a broader range of managers. Investor appetite for uncorrelated return streams continues to rise as market volatility persists. With industry AUM surpassing $ 5 trillion and technology spend at the largest funds reaching up to $ 500 million annually, the arms race for execution alpha is becoming more intense. Hedge funds have become the most sophisticated consumers of algorithmic trading technology in 2026, deploying AI-driven execution strategies across multiasset portfolios at a scale that demands continuous innovation from their broker and technology partners. With investor allocations increasingly concentrated in quant, multi-strategy and equity market neutral funds, algorithmic execution has become a key source of competitive advantage. The ability to intelligently navigate fragmented markets, minimise liquidity access and reduce market impact is playing an increasingly important role in supporting alpha generation and delivering uncorrelated returns. Against this backdrop, the 2026 Algorithmic Trading Survey offers a timely snapshot of hedge funds ' views on the quality, innovation and effectiveness of the algorithmic trading services they rely on. Hedge fund respondents awarded algorithmic trading providers an average score of 6.03 in 2026, the highest recorded since the survey ' s inception and a continuation of the upward trend observed since 2024.
The geographic distribution of traders responding to this year’ s survey remained broadly consistent with previous years, although there were some notable shifts. The percentage of traders based in Europe increased by seven percentage points to 37 %, while those based in the UK fell by nine percent to 28 %. The number of traders sat in North America rose by two percentage points to 21 %, while Asia-Pacific increased from 6 % in 2024 to 10 % in 2025 and 2026. The rest of the world accounted for 3 % of responding traders, in line with the previous year.
Regional trading activity also remained largely unchanged, with nearly all respondents trading both Europe and North American markets. Europe continues to
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