Key Takeaways
- • Goldman Sachs's prime brokerage reported that for the first time since Covid, all three of its broad equity hedge fund strategy categories fell more than 1% on the same day, one of the widest hedge fund selloffs since that period.
- • Global fundamental long/short funds fell 1.4%, their worst daily showing since July 16; global systematic long/short funds declined 1.3%, their third-worst day since December 2023; multistrategy platforms dropped 1.9%, their second-worst performance since the April 2025 tariff-driven selloff.
- • More than two-thirds of hedge funds finished the session down as concentrated short positions were squeezed higher in the second half of trading, according to Goldman's client note.
- • The Nasdaq 100 fell 2.9% on heavy selling in US tech amid doubts over whether massive AI spending will deliver returns, alongside concerns that higher oil prices could stoke inflation.
- • Asia-focused fundamental long/short managers are down 9.3% month to date, though remain up 14.2% for the year.
Summary
Goldman Sachs's prime brokerage reported a broad setback for hedge funds following Thursday's equity slump, which it described as among the most widespread hedge fund losses since the Covid era. In a client note, Goldman said that for the first time since Covid, all three of its main equity strategy categories fell by more than 1% during the same session. The firm also noted that more than two-thirds of hedge funds finished the day lower as concentrated short bets were pressed higher in the second half of trading.
The decline coincided with heavy selling in US technology stocks, driven by growing doubts over whether large AI infrastructure budgets will generate adequate returns, and by worries that higher oil prices could fuel inflation. The Nasdaq 100 dropped 2.9%, its largest fall since June.
By strategy, global fundamental long/short managers fell 1.4% at the close, their worst daily result since July 16. Funds focused on telecommunications, media and technology slid an average of 2.7%. Global systematic long/short funds declined 1.3%, which Goldman characterized as their third-worst day since December 2023. Multistrategy platforms, which are designed to buffer firm-level drawdowns, fell 1.9%, their second-worst performance since the tariff-driven selloff in April 2025.
Asia-focused fundamental long/short managers also lost money, leaving them down 9.3% for the month to date, although the group remains up 14.2% for the year.
Thursday's move followed a year of sharp swings around AI-linked names such as SK Hynix Inc. and Micron Technology Inc., whose rallies have been repeatedly interrupted by abrupt declines. In July, a slump across technology pushed the hedge fund Situational Awareness to the edge, raising concern that the AI rally could be losing momentum.
The decline coincided with heavy selling in US technology stocks, driven by growing doubts over whether large AI infrastructure budgets will generate adequate returns, and by worries that higher oil prices could fuel inflation. The Nasdaq 100 dropped 2.9%, its largest fall since June.
By strategy, global fundamental long/short managers fell 1.4% at the close, their worst daily result since July 16. Funds focused on telecommunications, media and technology slid an average of 2.7%. Global systematic long/short funds declined 1.3%, which Goldman characterized as their third-worst day since December 2023. Multistrategy platforms, which are designed to buffer firm-level drawdowns, fell 1.9%, their second-worst performance since the tariff-driven selloff in April 2025.
Asia-focused fundamental long/short managers also lost money, leaving them down 9.3% for the month to date, although the group remains up 14.2% for the year.
Thursday's move followed a year of sharp swings around AI-linked names such as SK Hynix Inc. and Micron Technology Inc., whose rallies have been repeatedly interrupted by abrupt declines. In July, a slump across technology pushed the hedge fund Situational Awareness to the edge, raising concern that the AI rally could be losing momentum.
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