Key Takeaways
- • Trend-following hedge funds posted their worst weekly performance in two years, with systematic long-short funds declining 2% in the week, according to a Goldman Sachs note seen by Reuters on Monday, October 26, 2026.
- • The Nasdaq 100 fell 5.5% last week, its biggest weekly drop since April 2025, led in part by a 10% weekly slide in Meta shares after the company said it would need to raise more capital for AI investments.
- • Goldman's prime brokerage desk reported $20 billion in tech stock selling over the last two weeks, close to the $23 billion July unwind.
- • Fundamental long/short strategies fell 1.1% last week and are down 3.8% in October, though still up 8.8% year to date; systematic strategies are down 1.1% in October but up 18.7% year to date.
Summary
Trend-following hedge funds recorded their weakest weekly performance in two years last week as concerns over the eventual payoff from heavy AI spending drove volatility across equity and bond markets, according to a Goldman Sachs note seen by Reuters on Monday. Systematic long-short funds, whose algorithms ride market trends until they fade, suffered their worst week since 2024 with a 2% decline. Fundamental long/short strategies dropped a further 1.1% over the same period.
The broader equity sell-off was significant. The Nasdaq 100, which includes the world's largest technology stocks, fell 5.5% last week, its steepest weekly decline since April 2025, when US tariffs announced by President Donald Trump roiled global markets. Meta shares slid 10% on the week despite strong earnings, after the company indicated it would need to raise additional capital to fund its AI investments.
Goldman's prime brokerage desk reported $20 billion in selling of technology stocks over the last two weeks, close to the $23 billion of selling seen during July's major unwind. The note said single stocks saw their largest de-grossing, a general pullback in positions, since late July, and US equities have been net sold for three straight weeks and in four of the last five weeks.
Performance remains positive on a year-to-date basis. Fundamental long/short strategies are down 3.8% for October so far but up 8.8% for the year, while systematic strategies are down 1.1% in October and up 18.7% year to date. Bond markets were also volatile, with investors moving into US Treasuries while selling debt of more fragile economies such as France.
The broader equity sell-off was significant. The Nasdaq 100, which includes the world's largest technology stocks, fell 5.5% last week, its steepest weekly decline since April 2025, when US tariffs announced by President Donald Trump roiled global markets. Meta shares slid 10% on the week despite strong earnings, after the company indicated it would need to raise additional capital to fund its AI investments.
Goldman's prime brokerage desk reported $20 billion in selling of technology stocks over the last two weeks, close to the $23 billion of selling seen during July's major unwind. The note said single stocks saw their largest de-grossing, a general pullback in positions, since late July, and US equities have been net sold for three straight weeks and in four of the last five weeks.
Performance remains positive on a year-to-date basis. Fundamental long/short strategies are down 3.8% for October so far but up 8.8% for the year, while systematic strategies are down 1.1% in October and up 18.7% year to date. Bond markets were also volatile, with investors moving into US Treasuries while selling debt of more fragile economies such as France.
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