Global hedge funds suffered one of their broadest declines since the Covid pandemic following Thursday's stock market selloff, according to the prime brokerage desk of Goldman Sachs Group Inc.
"For the first time since Covid, all three broad equity strategies fell more than 1% on the same day," the firm said in a note to clients. Global fundamental long/short managers were down 1.4% at the market close, their worst day since July 16, with telecommunications, media and technology-focused funds falling by an average of 2.7%. Global systematic long/short managers were hit by their third-worst day since December 2023, dropping 1.3%.
Even multistrategy platforms, the pod shops whose mix of portfolio managers is designed to protect against firm-wide drawdowns, slid 1.9% for their second-worst day since the April 2025 tariff selloff. US tech stocks were sold heavily on mounting concerns over whether massive spending on artificial intelligence will bear fruit. The Nasdaq 100 Index slid 2.9%, its steepest drop since June, as fears over oil-induced inflation added to the woes. Even bearish positions failed to reliably pay off during a volatile earnings season.
"Based on estimates from our prime book, more than two-thirds of hedge funds finished down on the day as concentrated shorts were squeezed further in the second half of the session," the prime brokerage said.
Asia fundamental long/short managers also lost money, with month-to-date declines at 9.3%. Even so, their hedge fund returns remain broadly positive so far this year at 14.2%, according to the note.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing