Hedge funds have slashed their portfolio leverage this year according to a report by Bloomberg which cites data from Goldman Sachs’ prime brokerage as revealing that net leverage, a measure of industry risk appetite that takes into account long versus short positions, has fallen by almost 20 percentage points to a year low of 66%.
Hedge funds have slashed their portfolio leverage this year according to a report by Bloomberg which cites data from Goldman Sachs’ prime brokerage as revealing that net leverage, a measure of industry risk appetite that takes into account long versus short positions, has fallen by almost 20 percentage points to a year low of 66%.
A similar decline to 41% among US long-short equity hedge funds can be seen in figures from Morgan Stanley’s prime brokerage, a level only ever been seen on a small number of occasions in the past ten years.
The report cites unnamed prime brokerage executives at two other global investment banks as saying that they believe defensive positioning by funds, as interest rates have risen and markets fallen, has driven the leverage reduction.
