Hedge funds are running near-record leverage as managers amplify equity and debt-backed strategies to lift returns in markets supported by the AI boom, according to a report by Reuters. Prime brokerage data from Goldman Sachs, JPMorgan, and Morgan Stanley shows gross leverage across equity long/short portfolios at or near all-time highs.
Goldman reported global gross leverage of 285%, up 12.4 percentage points this year, while JPMorgan put levels at 298% in November, the highest in five years. Morgan Stanley said current levels have been exceeded only 1% of the time in the past 15 years.
Managers and brokers say leverage of 10x or more is available when offsetting long and short positions. Multi-strategy and quant funds remain among the heaviest users, with JPMorgan reporting leverage of 645% and 444% respectively.
Bullish positioning has persisted despite recent volatility. UBS noted November saw one of the strongest bursts of equity buying this year, driven by long additions. The S&P 500 is up 16% year-to-date and the Nasdaq 100 has gained 22%.
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