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Hedge fund industry leverage declined in the last 12 months, according to the HFR Leverage Report, released by Hedge Fund Research, Inc. (HFR). Leverage declined as investor inflows and less volatile performance gains combined to increase global hedge fund industry assets to a record $2.02 trillion.
Average standard leverage decreased across all hedge fund strategies from 1.27 to 1.10 times investment capital, while average margin to equity also declined, falling from 17.13 to 16.98 percent, year over year. The percentage of funds which do not typically utilize leverage rose to approximately one third of all funds, an increase of four percent over last year, while over half of all funds utilize leverage of between one and two times their investment capital.
Also included in the report is historical analysis of hedge funds in an inflationary environment.
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