IMF warns of hedge fund risks to financial markets — Anadolu Agency

In Turkey on October 6, the International Monetary Fund warned that the growing role of hedge funds in global financial markets could amplify market stress. The risks are linked to the use of leverage, unstable funding sources, and crowded positions, when several funds hold similar positions simultaneously, Anadolu Agency reports.

Fund assets rose to $13 trillion

The IMF released the chapter “Hedge Funds and Financial Stability” of its Global Financial Stability Report ahead of the publication of the full report, scheduled for October 13.

According to the IMF, hedge funds’ gross assets increased from $4 trillion in 2013 to approximately $13 trillion at the beginning of 2026. Under normal conditions, their activity can support market liquidity and efficiency, but during periods of financial stress it can amplify price fluctuations and liquidity pressures.

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Share of the US government bond market

Fund representatives noted in an accompanying post that hedge funds’ presence is particularly notable in the government bond market: in 2025, funds held about 9% of US Treasury securities.

Unlike most financial intermediaries, hedge funds face relatively few restrictions on investing and borrowing. This allows them to invest in illiquid assets, make extensive use of leverage, and rapidly change positions. The IMF called for reducing data gaps, strengthening risk monitoring, and introducing targeted measures against risks associated with crowded positions and simultaneous deleveraging.