Archive · 6 Dec 2025
Hedge Funds Use Near-Record Leverage to Boost Returns
Hedge funds are using a lot of borrowed money, called leverage, to make bigger bets in the stock market.
This helps them make more money when the market goes up.
But it also means they could lose more if the market goes down.
Right now, they're using almost the highest amount of leverage ever, and some people are worried about what could happen if the market changes suddenly.
Even though there are some concerns, many experts think these funds are good at managing risks, and so far, their bets have paid off.
The stock market has been doing well, with big gains this year.
Hedge funds are using near-record leverage to boost returns, with gross leverage at 285.2% (Goldman) and 297.9% (JPMorgan).
The S&P 500 and Nasdaq 100 have seen significant gains year-to-date, up 16.1% and 21.6% respectively.
Multi-strategy funds account for one-third of the gross market value managed by hedge funds in equities.
Regulators like the Federal Reserve are scrutinizing the use of leverage by high-profile funds.
Experts note that while leverage magnifies gains and losses, top multi-strategy funds have strong risk management processes.
- Who
- Hedge funds, including multi-strategy and quantitative funds
- What
- Using near-record leverage to boost returns
- When
- Current trends, with data from November 2025
- Where
- Global markets, with a focus on the U.S.
- Why
- To juice returns in a bullish market environment
- Leverage Levels
- Near-record highs, with gross leverage at 285.2% (Goldman) and 297.9% (JPMorgan)
- Market Performance
- S&P 500 up 16.1%, Nasdaq 100 up 21.6% year-to-date
- Hedge Fund Strategies
- Long and short positions, debt-backed strategies
- Regulatory Scrutiny
- Federal Reserve and Bank for International Settlements monitoring leverage
- Multi-Strategy Funds
- Account for one-third of gross market value in equities
- Industry Growth
- Multi-strategy funds grew from $91B in 2010 to $428B in 2025
- Hedge Fund Returns
- Average return of 11% year-to-date (Morgan Stanley)