Hedge Fund Monitor
Leverage
Leverage measures the extent to which hedge funds borrow to enhance returns. While leverage provides benefits, it also comes with risk. Leveraged hedge funds are dependent on creditors’ willingness and ability to continue to lend. Further, declines in collateral and asset values can lead to margin calls that require hedge funds to tap their liquid assets and may leave them less able to meet short-term funding needs. As a result, elevated leverage combined with a reliance on short-term funding warrant closer inspection. Rapid growth in leverage also warrants additional analysis. Examples of leverage metrics include total borrowing, the ratio of gross assets-to-net assets, and the over-collateralization rate.
Repo borrowing by size cohort (percent of total)
Skip the ChartThe data are aggregated responses to SEC Form PF. Blank or null values are intentional to avoid potential disclosure of proprietary information of individual filers. Only responses from Qualifying Hedge Funds are included. See additional definitions and methodology on the SEC Form PF Data Sets page of the Hedge Fund Monitor.
Repo borrowing (cash in and securities out) is based on SEC Form PF question 43. A repurchase agreement (repo) is a sale of securities coupled with an agreement to repurchase the same, or similar, securities at a later date at an agreed upon price. Size cohorts are based on hedge funds’ ranking each quarter by gross assets.
Series Used
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Suggested CitationOffice of Financial Research, "Hedge Fund Monitor," refreshed monthly and quarterly, https://www.financialresearch.gov/hedge-fund-monitor/ (accessed ).