LONDON, April 15 (Reuters) - BlackRock's ( BLK ) hedge fund team

is urging investors to spread their exposure across multiple

hedge fund strategies, as AI-related and geopolitical disruption

increases the speed of market swings, creating winners and

losers at different times.

Investors should demand clarity on what is truly driving

hedge fund returns and where correlated risk might be growing in

their portfolios, BlackRock ( BLK ) said in its Spring Hedge Fund

Outlook on Wednesday.

It is the world's largest asset manager with roughly $14

trillion under management.

"Overlapping exposures and the use of leverage across

platforms warrant close monitoring, particularly in segments

where crowding can amplify both volatility and unwind risk,"

BlackRock ( BLK ) said in its report, noting the growth of

multi-strategy hedge fund platforms.

Global hedge funds last month faced their worst monthly

drawdowns in more than four years, according to several top Wall

Street prime brokerages, as volatility triggered by the Iran war

battered stocks and bond markets.

Several strategies suffered in the first quarter after a

blockbuster 2025. Funds responded to the volatility by pulling

back, selling equities for a fourth straight month and at the

fastest pace in 13 years, according to Goldman Sachs research.

Investors should stress test how their hedge fund investments

behave against their wider portfolio, BlackRock ( BLK ) said in its

report.

They should take profits on riskier holdings and find a

hedge fund that makes idiosyncratic returns irrespective of

whether markets are up or down, it added.

Asset classes that used to work as safe havens, such as

long-dated bonds and gold, have not worked this year as

previously, said BlackRock ( BLK ).

Since the start of the war, government bond yields have

shot up as the oil price surge boosted inflation worries while

gold, which has surged in recent years, was tapped to make up

for investor losses elsewhere, analysts say.

"As differentiation across markets increases, the

opportunity set for hedge funds expands with it," said Michael

Pyle, deputy head of the Portfolio Management Group at

BlackRock ( BLK ).