Goldman Sachs Hedge Fund Leverage at Five-Year Highs Could Trigger $165B Equity Selloff
GS•Goldman Sachs prime brokerage data show gross hedge fund leverage hit 294% in June 2025, a five-year high, with net leverage also near multi-year highs. JPMorgan forecasts quarter-end rebalancing could trigger $165 billion in equity sales, led by $60 billion from Japan’s GPIF and $55 billion from U.S. pension funds.
1. Surge in Hedge Fund Leverage
Goldman Sachs prime brokerage data tracked gross hedge fund leverage climbing to 294% in June 2025, the highest level in five years. Net leverage has also reached multi-year highs, signaling that funds are operating with historically elevated borrowing levels.
2. Quarter-End Rebalancing Risk
JPMorgan strategists estimate that quarter-end rebalancing could force up to $165 billion in equity sales as June closes. Japan’s Government Pension Investment Fund plans to sell about $60 billion, U.S. pension funds roughly $55 billion, while other sovereign and mutual funds add tens of billions more.
3. Crowded Tech and Semiconductor Exposure
Semiconductor positions now account for over six times their share of revenue in global equity value, more than double the ratio for leading AI-driven stocks. This concentration increases the risk of sharp market moves if mechanical selling accelerates.
4. Crypto Mining Fragility
Rising equity market volatility may extend to digital assets, as bitcoin miners operating near breakeven become more sensitive to price fluctuations. Growing hash rates at narrow margins create potential for sudden asset liquidations if bitcoin prices weaken.
