Hedge Funds Increasing Leverage in 2011

In January of 2011 hedge funds increased their leverage to levels not seen since 2007, according to Bloomberg.


Though hedge funds seem to be increasing leverage in tandem with the rising market, it is not necessarily the case that record amounts of hedge fund leverage in 2011 indicate increased risk taking overall - available cash and margin available also increased.


Its also not unusual to see hedge funds lever into bullish (appearing) markets. It will be interesting to see how a moderate decline in the equity indexes will affect hedge fund leverage.