IMF drew attention to the increasing importance and risks of hedge funds in global markets

The International Monetary Fund (IMF) stated that free investment funds (hedge funds) are becoming increasingly important actors in global financial markets and warned that vulnerabilities such as leverage, concentrated positions and investor outflows may increase price distortions and liquidity pressures during periods of financial stress.

IMF published the section titled "Hedge Funds and Financial Stability" of the Global Financial Stability Report, which will be published on October 13.

The report stated that the gross assets of hedge funds increased from 4 trillion dollars in 2013 to approximately 13 trillion dollars by the beginning of 2026.

The report emphasized that the increasing weight of hedge funds in the markets could support market liquidity and efficiency in normal periods, and pointed out that these funds could increase price distortions and liquidity pressures in times of financial stress.

The report noted that fundamental vulnerabilities such as leverage, fragile financing structure and concentrated transactions in which many hedge funds hold similar positions play a role in this impact.

The report, which also included policy recommendations, stated that data gaps should be closed, risk monitoring efforts should be strengthened, and risks arising from concentrated transactions and simultaneous deleveraging should be addressed with targeted measures.

In the blog post written by IMF officials on the subject, it was stated that the presence of free investment funds in financial markets attracted attention, especially in government bond markets, and that these funds held approximately 9 percent of US Treasury bonds in 2025.

It is stated in the article that, unlike most other financial intermediaries, hedge funds can invest and borrow with relatively few restrictions, and that this flexibility allows the funds to invest in illiquid assets, make extensive use of leverage and change their positions quickly.

In the article, it was stated that these features support liquidity, price discovery and risk sharing in normal periods, but can also ensure that shocks are transmitted and magnified through financial markets when markets deteriorate.