Fortress Investment Group is raising money for new funds and benefiting from investors' renewed demand for alternative assets like hedge and real estate funds, Fortress' CEO said on Wednesday.

"Capital is flowing back into hedge funds," Daniel Mudd, CEO of Fortress, said at the Goldman Sachs U.S. Financial Services Conference.

Demand is especially strong for funds specializing in distressed investments and global macro strategies, he said, adding that Fortress is raising money for distressed portfolios now.

Mudd, a former CEO of Fannie Mae, said most of Fortress' funds are close to reaching their high-water marks, meaning their values are expected to reach new highs, which would allow the company to begin charging incentive fees again.

"We have improved performance across the board in 2009," Mudd told analysts at the conference.