ETFs, mutual funds, and hedge funds use swaps for capital efficiency.
The fund and a bank agree to terms, generally with the fund receiving the total return of some underlying (e.g., another fund, an index) and paying the bank a financing spread (e.g., SOFR + 55 bps). Since the fund only has to post collateral to support the swap, the remaining fund assets can be invested elsewhere.
If you need a deep dive (with calculators and illustrations), check out Sunday's post.
A fringe benefit of using a swap is that there may be some tax advantages.
This is how one strategy works...