Large multistrategy hedge funds are managing more money using significant leverage and investing in the same stocks, according to a Pivotal Path report. The 10 large multistrats oversaw $2.2 trillion including borrowed money at the end of 2025, more than triple the amount in 2018. The current level of borrowing is about six times their combined net assets of $360 billion.
The six multimanager funds that use multiple trading pods had the highest leverage, ramping up their net capital by eight to 14 times. Pivotal Path also found that US stock holdings of the 10 giant firms overlapped more with one another than with other hedge funds. Since 2019, their returns have become more correlated.
The report indicates that a shock affecting these managers together would meet high leverage and overlapping positions, potentially making it difficult for managers with shorter lockups to meet redemption requests. Most industry giants have lockups extending several years to avoid forced selling. A Pivotal Path representative declined to comment beyond the report.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing