Hedge funds reduced their exposure to global equities at the fastest rate in two months last week, with investors selling existing long positions more aggressively than they established new short bets, according to a report by Investing.com citing data from Goldman Sachs’ Prime Services business.
The selling marked the first weekly decline in global equity exposure among Goldman-serviced hedge funds in a month and represented a move of 2.3 standard deviations below the average level recorded over the previous year.
Long positions accounted for the bulk of the reduction, with long sales outpacing the creation of new shorts by 1.8 to 1. The pattern suggests hedge funds were primarily taking risk off the table rather than making a broad shift towards bearish equity positioning.
Selling was widespread across major regions, with North America and emerging Asian markets recording the largest declines in dollar terms.
Information technology was the most heavily sold sector during the week. The reduction was driven overwhelmingly by hedge funds cutting long positions, producing the sector’s sharpest percentage decline in gross exposure in more than two years.
Energy was the notable exception. It was the only sector to record net buying and attracted its strongest inflows in almost four years.
The sector has now registered net purchases in 12 of the past 13 weeks, highlighting a sustained shift in hedge fund positioning towards energy despite the broader reduction in equity exposure.
The selling also reduced aggregate net leverage across the Goldman Prime Services book to 76.8%, placing positioning in the 27th percentile of its range over the past year.
That relatively low level suggests hedge funds were not carrying particularly aggressive levels of equity risk ahead of last week’s selling.
