Market crowded trades quickly unwind! Hedge funds’ net leverage drops sharply to the 8th percentile of the past year.

``` Hedge funds completed a drastic position reset in less than a week. The latest data from JPMorgan shows that hedge fund net leverage has plummeted to the 8th percentile over the past year, and one of the most closely watched bearish arguments in the market (overcrowded positions) is quickly fading. According to data from JPMorgan’s Prime Brokerage, hedge fund net leverage has fallen back to the 8th percentile range of the past year. JPMorgan said: "Hedge fund net leverage has returned to the low end of the 12-month range and is approaching the average level of the past five years. Selling pressure was most evident in the North American market, mainly due to the trimming of long positions, reversing the buying trend seen since late May. The level is now at the 8th percentile." The single-week change in the Composite Positioning Indicator (TPM) has sharply reversed from over +2 standard deviations during the recent market peak to below -2 standard deviations this week, bringing position levels back to the neutral range. However, this round of deleveraging does not mean that market risks have been fully cleared. Momentum factors and other high-risk factors’ exposures remain at extreme levels, leaving potential market vulnerabilities. JPMorgan said: "Despite the recent drop in volatility and beta (market sensitivity), hedge funds’ net exposures to these factors remain near the highs of mid-February 2021." Risk Warning and Disclaimer The market has risks; investment requires caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk. ```