Goldman Sachs: Trend-Following Hedge Funds Drop 2% in One Week, Worst Performance in Nearly Two Years
nashnova research
Trend-following hedge funds fell 2% last week, their worst single-week result in nearly two years, according to a Goldman Sachs report shared with Reuters. A tech selloff sparked by AI-capex concerns sent the Nasdaq 100 down 5.5%, and deleveraging pressure is building into year-end.
What lit the fuse?
Meta posted strong earnings but said it needs more capital for AI. Its stock fell 10% in a week.
This means → the market's worry is not whether Meta makes money — it is whether Big Tech's reinvestment of profits into AI will ever pay off on schedule.
The chain reaction spread fast: the Nasdaq 100 dropped 5.5%, its steepest weekly decline since the April 2025 "Liberation Day" tariff shock.
How much did hedge funds lose?
Systematic long-short strategies — funds that trade on model signals rather than human judgment — fell 2% in a week. Fundamental long-short strategies lost 1.1%.
Over the full month, fundamental strategies are down 3.8% since October began; systematic strategies are down 1.1%.
Year-to-date, fundamental strategies are still up 8.8% and systematic strategies up 18.7%. In plain terms = this year's gains have not been wiped out, but the cushion is thinning.
How severe is the tech selloff?
Goldman's prime-brokerage data: roughly $20 billion in tech stocks were sold over the past two weeks, approaching the $23 billion peak during the July AI-deleveraging episode.
Single-stock de-grossing — the pace at which funds collectively cut individual positions — hit its highest level since late July.
U.S. equities have been net sold for three straight weeks, and four of the past five. This reflects not a one-off scare but a sustained pullback in risk appetite.
What is happening in the bond market?
Investors piled into U.S. Treasuries for safety while dumping sovereign debt from fiscally weaker economies such as France.
This means → capital is making a simple choice: move money from "places that might crack" to "the safest place available."
Will year-end deleveraging pressure ease?
Fund managers still hold sizable year-to-date gains, creating a strong incentive to lock in profits and cut exposure as year-end approaches.
In plain terms = managers who are up for the year would rather sell now than risk giving back gains before the books close.
Whether deleveraging pressure eases in the near term remains the market's central unresolved question — if more funds decide to take chips off the table, selling pressure could become self-reinforcing.
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