Hedge fund gross assets rose from 4 trillion dollars in 2013 to 13 trillion dollars at the start of 2026, the IMF said in its October 2026 Global Financial Stability Report. Over the same period, gross nominal exposure, including derivatives, climbed from 13 trillion dollars to more than 40 trillion dollars. The fund devoted a chapter of the report to the sector.
The growth reflects hedge funds taking over market functions that banks had performed before bank regulation tightened. The IMF noted that gross assets and gross nominal exposure are different measures, and that the second includes off-balance-sheet positions and derivatives.
Concentration in Treasury markets
Hedge funds held 4 percent of US Treasuries in 2022 and 9 percent in 2025, the IMF said. The growth was largely driven by leveraged arbitrage trades such as the cash-futures basis trade.
Sixteen managers with more than 20 billion dollars in client assets control about one-third of sector net assets. The ten largest players hold about one-third of the sector’s total gross exposure.
Stress and crowded positions
The IMF found that crowded hedge fund stocks showed volatility about 10 percentage points higher, and maximum drawdowns 4 percentage points deeper, during periods when the VIX sat in the top decile of its historical observations.
The findings bear on financial stability and on the risk of forced selling in markets where leveraged funds are large holders.
Source: IMF
