(HedgeCo.Net)  Hedge fund leverage — already elevated — is climbing sharply as managers seek higher returns in a competitive, low-yield environment. Prime brokerage data shows borrowings and leverage levels nearly doubling over the past two years, reflecting a renewed appetite for risk and amplified directional bets. Apollo Academy

The Leverage Landscape

Leverage has become synonymous with hedge fund strategy in 2025, driven by:

• Thin cash buffers
• Strong equity positions
• Complex macro hedging

While leverage can boost returns, it also magnifies losses when markets wobble — a dynamic hedge funds are rigorously managing as volatility signals spike.

Implications for Markets

Heightened leverage across the industry contributes to:

• Greater systemic risk
• Amplified price moves
• Faster capital flows into/out of assets

As hedge funds reposition for a potentially turbulent 2026, risk management — not just returns — has become a central theme among allocators and investors.