Hedge funds log widest daily drawdown since Covid in stock rout

‘All three broad equity strategies fell more than 1 per cent on the same day,’ Goldman Sachs says

GLOBAL hedge funds suffered one of their broadest declines since the Covid-19 pandemic following the stock market sell-off on Thursday (Oct 22), said Goldman Sachs’ prime brokerage desk.

“For the first time since Covid-19, all three broad equity strategies fell more than 1 per cent on the same day,” it said in a note to clients.

Global fundamental long/short managers were down 1.4 per cent at the market close on Thursday, their worst day since Jul 16, with telecommunications, media and technology-focused funds falling by an average of 2.7 per cent, according to the note.

Global systematic long/short managers were hit by their third-worst day since December 2023, dropping 1.3 per cent.

Even multi-strategy platforms – the pod shops with a broad mix of portfolio managers designed to protect against firm-wide drawdowns – slid 1.9 per cent for their second-worst day since the April 2025 tariff sell-off.

Tech stocks in the US were sold heavily on Thursday on mounting concerns over whether massive spending on artificial intelligence will bear fruit.

The Nasdaq 100 Index slid 2.9 per cent, the most since June, as fears over oil-induced inflation added to the woes. Even bearish positions are not necessarily paying off in a volatile earnings season.

“Based on estimates from our prime book, more than two-thirds of hedge funds finished down on the day, as concentrated shorts were squeezed further in the second half of the session,” the prime brokerage said.

Asia fundamental long/short managers also lost money, with month-to-date declines at 9.3 per cent. Even so, their hedge fund returns remain broadly positive so far this year at 14.2 per cent, going by the note. BLOOMBERG

Source: The Business Times https://www.businesstimes.com.sg/international/hedge-funds-log-widest-daily-drawdown-covid-stock-rout