Buy side targets leverage cap in SEC derivatives plans

AQR says its managed futures fund could suffer larger drawdowns under new rule

Asset managers say proposed blocks on leverage will push firms towards riskier strategies

Asset managers have sharply criticised the Securities and Exchange Commission's (SEC's) proposed investment fund shake-up, speaking out against the regulator's idea of setting two fund leverage caps, at 150% and 300% of total assets, which would limit funds' derivatives use. Under plans announced in December 2015, a fund's gross asset exposure, which includes synthetic exposure through derivatives, reverse repos and shorting, would be capped at 150% of assets, or 300% of assets if a value-at-