Several of Asia’s largest multi-strategy hedge funds posted their steepest monthly losses of the year in July as a sharp reversal in semiconductor and AI -related stocks across the region erased a portion of the strong gains generated during the first half of 2026, according to a report by Reuters.
The selloff, fuelled by mounting concerns over AI spending and heightened geopolitical tensions in the Middle East, weighed heavily on positions that had previously been among the industry’s strongest performers. Semiconductor shares in Japan, South Korea and China were particularly hard hit.
While the losses were significant, multi-strategy platforms generally outperformed the broader Asian hedge fund industry. According to Goldman Sachs, Asia-focused stock-picking hedge funds declined 15.2% in July, marking their worst monthly performance on record. By comparison, many of the region’s leading multi-strategy firms reported monthly declines of between 3% and 9%.
For investors, losses of more than 5% are unusual for multi-strategy platforms, which seek to limit volatility by allocating capital across multiple portfolio managers investing in equities, fixed income, macro strategies and commodities.
Among the hardest-hit firms was Hong Kong-based Polymer Capital Management, which manages more than $6bn. After being one of the region’s strongest-performing multi-strategy managers during the first half of the year, the fund declined 6.9% in July, reducing its year-to-date gain to 11.5%. The setback was attributed in part to Japanese equity positions.
Singapore-based Dymon Asia’s $9bn multi-strategy fund also fell 6.5% during the month, leaving it up 7.5% for the year through July. Hong Kong-headquartered Pinpoint Asset Management’s flagship multi-strategy fund reportedly declined 9%, while Singapore’s Arrowpoint Investment Partners limited its losses to 2.6%.
Arrowpoint’s relatively resilient performance reflected a more defensive positioning ahead of the market correction. According to sources familiar with the firm’s strategy, the manager reduced overall portfolio risk before July after identifying signs of excessive leverage in Asian equity markets, particularly in South Korea and Taiwan, where financing conditions were becoming more restrictive.
Market participants expect performance dispersion across hedge funds to remain elevated as rapid developments in artificial intelligence continue to reshape equity markets and higher interest rates create both opportunities and challenges for different investment strategies.
