Fund managers who oversee contrarian “tail-risk” funds—those created with the objective of preparing for crisis events—say conditions are ripe for a “full-blown financial earthquake,” according to a recent article in Bloomberg.

In an interview with Bloomberg, Richard “Jerry” Haworth of 36 South Capital Advisors LLP, whose contrarian approach reaped huge rewards from the 2008 crisis, said: “The financial system is a lot more fragile than it was in 2007. Leverage is up on every single metric, in just about every category, and debt has increased. The more you indebt someone, the more fragile they become, especially with variable interest rates.”

The article reports that assets in tail-risk funds have risen from $3.2 billion in 2011 to $4.9 billion, and, so far this year, are up 0.54 percent (data from Eurekahedge Pte Ltd.). According to Haworth, “risky securities and investing strategies that have flourished during the decade of easy-money policies…could accelerate a downturn. The boom in passive investing may intensify the looming deleveraging wave as exchange-traded funds rush to sell the same securities in unison.”

There are indicators that bulls find comforting, the article points out, including estimate-beating earnings announcements, healthy banks, a favorable macroeconomic situation and “economies with lower sensitivity to inflation than before,” according to Philippe Ithurbide, global head of research at Amundi Asset Management. But the article points out that, although there are “few prophets of doom on Wall Street” even in the current environment of elevated share valuations, the “tone is getting more bearish.”