Large multi-strategy hedge funds highly leveraged; crowded positions may amplify market shocks.

A recent report from PivotalPath shows that large multi-strategy hedge funds are managing increasingly larger amounts of capital and making heavy use of leverage, and as they increasingly invest in the same stocks, the market could face more severe turbulence when hit by shocks. According to the research firm's statistics, as of the end of 2025, 10 large multi-strategy funds collectively managed $2.2 trillion, more than triple the level in 2018. PivotalPath did not disclose the names of the funds. PivotalPath estimates that these ten funds currently have borrowings of roughly six times their combined net assets of $360 billion. Six funds employing the multi-trading-team model have the highest leverage, with net capital magnified by 8 to 14 times. PivotalPath also found that the U.S. equity holdings of these 10 large institutions overlap with each other more than they overlap with those of other hedge funds. Compared with other funds, their return correlation with one another has also risen since 2019.