Trend hedge funds saw worst week since 2024 as AI stocks fell, Goldman says
META•Systematic long-short hedge funds fell 2% last week, their worst weekly performance since 2024, as concern over returns from AI spending drove volatility in stocks and bonds. Goldman Sachs said its prime brokerage desk recorded $20 billion in tech-stock selling over the past two weeks.
1. Funds post weekly losses
Systematic long-short hedge funds, which use algorithms to follow market trends, lost 2% last week, while fundamental long-short strategies fell 1.1%. Fundamental strategies are down 3.8% so far this month but up 8.8% this year; systematic strategies are down 1.1% in October and up 18.7% year to date.
2. Selling spreads across markets
The Nasdaq 100 fell 5.5% last week, its biggest weekly drop since April 2025. Meta shares slid 10% after the company reported strong earnings and indicated it would need to raise more capital for AI investments. Investors sought the relative safety of U.S. Treasuries while selling debt from more fragile economies, including France.
3. Tech selling accelerates
Goldman Sachs said its prime brokerage desk reported $20 billion in tech-stock selling over the past two weeks, near the $23 billion recorded during a major unwind in July. Single stocks saw their largest de-grossing since late July, and U.S. equities were net sold for a third consecutive week and in four of the past five weeks.
