Strong performance is reinforcing the case for #hedgefunds#. 📊 Discretionary Equity led recent returns, while Quant Equity remains the standout performer over the last five years. Learn more:

Hedge funds turned positive on the yen for the first time since July 2025, a noteworthy shift in sentiment weeks after US and Japanese authorities intervened in the market to support the currency

Hedge funds continued to rebuild US tech positions this week. That's 3/3 weeks now where HFs net bought tech stocks - mainy driven by BOTH semiconductor and software longs. On the whole, the discourse around AI pacing and the Fed rate hike decision were largely ignored/digested with institutions seeming to acknowledge that there's no AI infra bubble. Overall, this is probably a sign of growing positive sentiment after a rough July.

Hedge fund Treasury holdings: $2.35 trillion, up 154% in 5 years. They now own a record ~7% of the marketable Treasury market. Why? The basis trade, arbing tiny price differences between cash bonds and futures using heavy leverage. Banks can't absorb enough new supply, so levered hedge funds are filling the gap. The US Treasury market is increasingly dependent on a crowded, leveraged trade to function. h/t @KobeissiLetter

Hedge funds have become a major driver of the US Treasury market. Hedge fund cash Treasury holdings stood at $2.35 trillion in Q1 2026, the 3rd-highest reading on record. Over the last 5 years, this figure has surged +154%, or +$1.42 trillion. For perspective, marketable Treasury debt outstanding increased +44% over the same period, to a record $32.2 trillion. As a result, hedge funds now own a record ~7% of the marketable Treasury market, up from ~4% in 2021. A major driver behind the surge is the cash-futures basis trade, where hedge funds take offsetting positions in Treasury securities and futures to profit from small price differences. Because these gains are small, the strategy involves significant leverage. This leverage allows hedge funds to absorb more Treasury debt at a time when the banks that normally help absorb new Treasury supply have limited capacity to hold more bonds. Hedge funds are changing how the Treasury market works.

Hedge funds may now be a bigger risk to Treasuries than China: For years, China was considered the biggest threat to the US Treasury market, as China’s official Treasury holdings grew to as large as $1.3 trillion in 2013, or 14% of the total. This proportion, however, has steadily declined since then, to ~2%, its lowest since 2001. Meanwhile, hedge funds now account for ~9% of all Treasuries outstanding, more than double their level seen in 2013. Hedge funds now hold ~$2.6 trillion of Treasuries, with their gross exposure at ~$4.0 trillion, which includes short positions. More importantly, these positions are increasingly debt-financed, with hedge fund repo cash borrowing surging to ~$3.0 trillion, more than doubling since early 2023. This makes the Treasury market more vulnerable to forced selling, since a rise in yields can trigger margin calls for these leveraged funds, forcing them to sell Treasuries to raise cash and reduce their debt. Hedge funds have become a major force in the Treasury market.