With policy uncertainty, geopolitical shocks and sharp gaps between winners and losers, markets are handing hedge funds a more selective opportunity. Barclays Private Bank sees a modest edge for liquid relative value strategies because they profit from orderly dislocations rather than panicked selling. Sovereign bond relative value, volatility strategies and convertible arbitrage look best placed, since changing rate expectations, equity swings and rising dispersion create mispricings they can capture without leaning heavily on leverage. History shows relative value does best when volatility is calm or steady and dispersion is healthy, and it struggles when volatility spikes. The message for investors is quality over quantity: manager and sub strategy choice matter more than simply adding hedge funds.

Finsum: Relative value shows that calm dislocations can be more valuable than loud volatility.