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Hedge fund financing shifts risk from banks to leveraged vehicles

Reported · Written up by our desk · Fund Industry

Hedgeweek says that since the global financial crisis, hedge fund financing has evolved in a way that moves risk away from banks balance sheets and toward highly leveraged investment vehicles.

The outlet argues that this change has concentrated exposures within the hedge fund ecosystem, making leverage more likely to become systemic.

It frames the issue as an ongoing shift in where leverage sits in the financial system, rather than a temporary feature of the post crisis period.

The report focuses on how the plumbing of hedge fund funding has altered risk distribution across institutions.

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