Report published September 25, 2026

Morgan Stanley: Weekly HF Highlights: HFs Continue Buying Agentic AI, Limited Appetite to Re-Deploy Gross in EU and APAC

Morgan Stanley · September 25, 2026

Global hedge funds were net buyers of equities this week driven by post-FOMC re-grossing into US Tech and Agentic AI, while selling Europe and Asia ex-Japan. Overall fund gross leverage remains near 12-month lows in the US, leaving ample balance sheet capacity to re-risk.

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Key Takeaways

1.Hedge funds were net buyers of global equities via long additions, driven predominantly by post-FOMC re-grossing in US equities led by Tech and Agentic AI.
2.Managers pressed shorts in European and Asian equities, with European selling concentrated in Industrials (Aerospace & Defense and Transports), while gross re-deployment outside the US remains muted.
3.US L/S gross leverage remains near 12-month lows despite re-grossing, leaving ample room to expand balance sheet exposure on both long and short sides.

This Week's Highlights (as of Thursday, September 24th)
Weekly Flows: Global Summary
Weekly Flows: Sector Flows Summary
Regional Leverage: US, Europe, and Asia
Performance Highlights: MTD & YTD HF Performance Estimates
Crowding Performance: Top 50 Crowded Longs vs. Shorts
N. America Daily Crowding Perf: Top 50 Crowded Longs vs. Shorts

Report data

Gross Leverage By Region — as of September 24, 2026.

Metric	Estimate	Context
US L/S Fund Net Leverage	53%%	Sits at the 36th percentile over 1-year and 60th percentile since 2010.
US L/S Fund Gross Leverage	209%%	Represents the 18th percentile over 1 year and 93rd percentile since 2010.
Global Equity L/S Average Performance MTD	-1.04%%	Average return of global equity L/S funds.
Top 50 Crowded Long vs Short Spread YTD (N. America)	21.18%%	Top 50 longs (+34.50%) vs top 50 shorts (+13.32%) compared to S&P 500 (+12.50%).