The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Hedge funds become the US fixed-income market

According to a study by research and consulting firm Greenwich Associates, hedge funds generated nearly 30% of US fixed-income trading volume last year.

Hedge funds generate more than 55% of US trading volume in liquid or "flow" derivatives with investment-grade ratings, and more than 80% in high-yield derivatives; more than 85% of US trading volume in distressed debt, nearly 55% of US trading volume in emerging-market bonds; and more than 40% of US leveraged loan trading volume.

In the liquid markets, hedge funds have been similarly expanding their trading activity, according to the report. In US government bonds, hedge funds are now the second-largest source of trading volume after investment funds/advisers, generating 30% of market volume. They rank as the biggest source of trading volume in interest rate derivatives, in which they also account for 30% of total US trading volume. Hedge funds generate a quarter of US asset-backed securities trading volume, and 20% of volume in mortgage-backed securities.

"However, it is at the other end of the liquidity spectrum that hedge funds have become the biggest force. In structured credit, hedge funds generated nearly half the trading volume reported in the US over the past 12 months," says Greenwich Associates consultant Frank Feenstra. "The recent expansion of hedge fund positions and trading activity has been so rapid and consistent that it is now no exaggeration to say that, during the period 2006 to 2007, hedge funds were no longer just an important part of the market in some fixed-income products – they were the market," says the study.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree