Key Takeaways
- • Global fundamental long-short funds lost 2.9% in the week to October 15, 2026, while still holding year-to-date gains of 14.3%, according to a Goldman Sachs prime brokerage note.
- • Asia-focused stock pickers have lost 6.8% in the first half of October and have erased more than half of their gains from a late-June peak, when they were up more than 40% for the year.
- • Stock pickers globally lost money every day this week, with Asia-focused managers down 2.6% and tech-focused funds off 2.0% on Thursday, October 15.
- • Goldman Sachs says global AI stocks have been sold by long-short managers for six straight sessions, and the October 15 move marked the third time in 2026 that all three broad hedge fund strategies fell more than 80 bps in a single day.
- • South Korea's KOSPI fell 8% to a six-month low on Thursday, with Taiwan stocks down more than 3%, as hotter-than-expected US inflation raised expectations of further rate hikes.
Summary
Global hedge funds suffered steep losses this week after a sharp unwind of AI-related positions, with Asia-focused managers bearing the heaviest losses, according to Reuters reporting based on a Goldman Sachs prime brokerage note. Global fundamental long-short funds, or stock pickers, lost money every day this week and posted a 2.9% weekly loss through October 15, though they remain up 14.3% year to date.
The selloff was driven by investor doubts about whether massive AI spending can generate returns soon, compounded by elevated inflation that keeps borrowing costs high. Hotter-than-expected US inflation data increased expectations of further rate hikes and fueled losses in semiconductor and AI supply chain stocks. Wall Street ended the week sharply lower on Friday, with AI-related names including CoreWeave and Broadcom under renewed pressure, and a jump in oil prices unsettled traders heading into the weekend. CoreWeave's bonds sold off sharply, pushing yields above 15%.
Goldman Sachs said global equities were net sold again on Thursday, though at a much slower pace than Wednesday's AI unwind. Dollar-terms de-grossing on Thursday was roughly half of Wednesday's level, driven by long selling outpacing short covering. Global AI stocks have been sold by long-short managers for six straight sessions. On Thursday, stock pickers globally lost 0.9%, Asia-focused managers fell 2.6%, and tech-focused funds declined 2.0%. Global systematic long-short and multi-strategy funds each fell roughly 1%.
Goldman noted that from COVID through end-2025, the three broad hedge fund strategies never fell more than 80 bps on the same day. That threshold has now been breached three times in 2026, on February 4, July 28 and October 15. Asia-focused stock pickers have lost 6.8% in the first half of October, erasing more than half of the gains built since their late-June peak, when they were up more than 40% for the year.
Equity markets in the region bore the brunt of the selloff. South Korea's benchmark KOSPI tumbled 8% to close at a six-month low on Thursday, and Taiwan stocks lost more than 3%, reflecting the concentration of semiconductor and AI supply chain exposure in these markets.
The selloff was driven by investor doubts about whether massive AI spending can generate returns soon, compounded by elevated inflation that keeps borrowing costs high. Hotter-than-expected US inflation data increased expectations of further rate hikes and fueled losses in semiconductor and AI supply chain stocks. Wall Street ended the week sharply lower on Friday, with AI-related names including CoreWeave and Broadcom under renewed pressure, and a jump in oil prices unsettled traders heading into the weekend. CoreWeave's bonds sold off sharply, pushing yields above 15%.
Goldman Sachs said global equities were net sold again on Thursday, though at a much slower pace than Wednesday's AI unwind. Dollar-terms de-grossing on Thursday was roughly half of Wednesday's level, driven by long selling outpacing short covering. Global AI stocks have been sold by long-short managers for six straight sessions. On Thursday, stock pickers globally lost 0.9%, Asia-focused managers fell 2.6%, and tech-focused funds declined 2.0%. Global systematic long-short and multi-strategy funds each fell roughly 1%.
Goldman noted that from COVID through end-2025, the three broad hedge fund strategies never fell more than 80 bps on the same day. That threshold has now been breached three times in 2026, on February 4, July 28 and October 15. Asia-focused stock pickers have lost 6.8% in the first half of October, erasing more than half of the gains built since their late-June peak, when they were up more than 40% for the year.
Equity markets in the region bore the brunt of the selloff. South Korea's benchmark KOSPI tumbled 8% to close at a six-month low on Thursday, and Taiwan stocks lost more than 3%, reflecting the concentration of semiconductor and AI supply chain exposure in these markets.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.