IMF warns growing hedge funds could amplify market shocks
The IMF is warning that hedge funds’ growing role in financial markets could magnify shocks, even though their trading helps markets function in normal times.
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According to ANP’s account of a new IMF report, hedge funds’ total assets under management have tripled since 2013 to $13 trillion. The funds held about 9% of US Treasury securities in 2025, ANP reports. Many use borrowed money, while their trading helps keep markets active and can help businesses obtain funding in ordinary conditions. [1]
The IMF warns that those same characteristics could make financial shocks worse. If interest rates rise and borrowing becomes more expensive, hedge funds may have to sell investments when markets are already under pressure, potentially deepening price falls. Losses could also affect banks and spread across borders, according to the IMF’s account reported by ANP. These are risks the fund describes, not disruptions reported to have occurred. [1]
The IMF wants vulnerabilities mapped more clearly and has called for stress tests to examine how shocks could spread through the financial system. Its experts say many supervisors still lack important information. [1]
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