Hedge fund money is leveraged several times and turns over far more frequently than traditional money.

Judge as of April 2007. Hedge fund assets were roughly $1 trillion or more. The claim has two parts: (a) that money was leveraged several times, and (b) it turned over far more often than traditional long-only money. True: industry or regulatory data from around 2007 show typical hedge fund gross leverage of about 2x or more on aggregate, and portfolio turnover well above that of mutual funds or pension money. Mostly true: both parts hold broadly, but aggregate leverage was nearer 1.5-2x than 'several times'. Mixed: only one part holds. Mostly false: leverage was modest (near 1x) and turnover only somewhat higher. False: neither leverage nor turnover was notably higher than for traditional money.

Set before the research began.

1. E1 IMF Global Financial Stability Report: Market Developments and Issues; April 2007. International Monetary Fund · April 2007

   “They typically use leverage to amplify the returns from their trading strategies.”

2. E2 IMF Global Financial Stability Report: Market Developments and Issues; April 2007. International Monetary Fund · April 2007

   “Global institutional investors’ capital allocated to hedge funds was estimated at $360 billion as of end-2005, representing 30 percent of total hedge fund assets under management”

3. E3 IMF Global Financial Stability Report: Market Developments and Issues; April 2007. International Monetary Fund · April 2007

   “Hedge funds now account for a third of trading volume and, therefore, the liquidity provided”

4. E4 Global Financial Stability Report: Market Developments and Issues (April 2007) International Monetary Fund · April 2007

   “grew from $30 billion in 1990 to more than $1.4 trillion as of end-2005.”

5. E5 Global Financial Stability Report: Market Developments and Issues (April 2007) International Monetary Fund · April 2007

   “U.S. institutional investment in hedge funds more than doubled to $136 billion from 2003 to 2005, much of which came from pension fund allocations”

6. E6 [PDF] FINANCIAL STABILITY REVIEW - Publications - Banque de France Banque de France (Financial Stability Review, special issue on hedge funds, No. 10) · April 2007

   “in 2006, there were approximately 9,500 hedge funds with about USD 1,400 billion worth of assets under management.”

7. E7 [PDF] FINANCIAL STABILITY REVIEW - Publications - Banque de France Banque de France (Financial Stability Review, special issue on hedge funds, No. 10) · April 2007

   “By early 2007, several data providers indicated that, on the basis of joint internal and commercially distributed hedge fund data samples, the total capital under management by single-manager hedge funds globally was rapidly approaching the USD 1.5 trillion mark.”

8. E8 [PDF] FINANCIAL STABILITY REVIEW - Publications - Banque de France Banque de France (Financial Stability Review, special issue on hedge funds, No. 10) · April 2007

   “a relatively aggressive average leverage ratio of 5 to the entire hedge fund industry, its total size remains small compared to the more than USD 60,000 billion”

The evidence supports the size premise: hedge fund assets were about $1.4 trillion or more by end-2005 and 2006 (E4, E6, E7). The IMF says hedge funds typically use leverage but gives no aggregate multiple (E1). The only figure, a "relatively aggressive average leverage ratio of 5" (E8), is cut off, and it may be a hypothetical used to illustrate scale rather than an observed figure. On turnover, the IMF says hedge funds account for a third of trading volume (E3), but none of the evidence compares their portfolio turnover with that of mutual funds or pension money. Neither part of the claim can be settled under the criteria.