Global Hedge Funds Suffer Broadest Drawdown Since Pandemic
Global hedge funds experienced a widespread daily sell-off on October 22 driven by a decline in U.S. tech stocks and AI spending concerns.
Goldman Sachs reported that global hedge funds suffered one of their broadest daily drawdowns since the Covid-19 pandemic following a stock market sell-off on October 22. All three broad equity strategies declined by more than 1% on the same day, marking a rare synchronized drop across different investment approaches.
Multi-strategy platforms led the decline with a 1.9% slide, while global fundamental long/short managers dropped 1.4%. Managers focused specifically on telecommunications, media, and technology saw an average decline of 2.7%. Global systematic long/short managers also fell by 1.3%.
The rout stemmed from heavy selling of U.S. tech stocks, fueled by investor concerns over artificial intelligence spending returns and fears of oil-induced inflation. These factors contributed to a 2.9% drop in the Nasdaq 100 Index. Goldman Sachs estimated that more than two-thirds of hedge funds ended the day with losses, noting that concentrated short positions were squeezed during the second half of the trading session.
