AIMA: Low Levels of Leverage in Global Hedge Fund Industry

24 April 2009

The world’s hedge fund industry has historically low levels of leverage, and the idea of the industry as highly-leveraged is a misconception, according to AIMA, citing the most recent figures from the ECB and the UK FSA.

The world’s hedge fund industry has historically low levels of leverage, and the idea of the industry as highly-leveraged is a misconception, according to AIMA citing the most recent figures from the ECB and the UK FSA, both showing that leverage levels of hedge funds are in the region of 1 times net assets.

 

The recent Turner Review in the UK pointed out that hedge fund leverage is “typically well below that of banks”. Andrew Baker, CEO of AIMA, commented, “These figures, which are historically low, are typical of the industry worldwide and are much lower than leverage levels in the banks. In fact the Turner Review reported that leverage levels in the banks were in the order of 30 to 50 times.”

 

AIMA also underlined the relative size of the global hedge fund industry compared to the banking sector. “There are some individual banks that have bigger balance sheets than the entire global hedge fund industry”, Andrew Baker concluded.

 

Press release

 

 

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