Hedge Fund Leverage Jumps

Jan 14 2013 | 1:14pm ET

Hedge funds are levering up in the new year to levels not seen in eight years or more.

Leverage among long/short equity hedge fund managers is higher now than at any point since at least 2004, according to Morgan Stanley. The increasing friskiness of hedge fund managers—who largely missed out on last year's stock-market rally—can also be seen in margin debt offered by New York Stock Exchange brokers, which hit a nearly four-year high in November.

Gross hedge-fund leverage was 153% in the week ended Jan. 4. That's up 10% from a year earlier and from the industry's eight-year average and 1% from last year's average.

It's clear that hedge funds and other market players are confident that stocks will continue to rise this year: Long bets on Standard & Poor's 500 Index futures hit a nearly four-year high at the beginning of the month.

"Indicators are bullish and equity hedge funds are jumping on the bandwagon, thinking now is a good time to have more exposure to the market," Barclays hedge fund consulting chief Anurag Bhardwaj told Bloomberg News. "That's a good thing for the market overall."


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.