Goldman Sachs’ second-quarter earnings delivered a clear message – its bet on hedge fund clients is paying off in a big way, as the investment bank posted record equity trading of $4.3bn, according to a report by Bloomberg.
That total was fuelled in large part by surging demand from hedge funds for financing and risk exposure amid market volatility, while the bank also saw strong momentum in derivatives and cash equities trading, with a 36% year-on-year jump in equities revenue – outpacing peers Morgan Stanley and JPMorgan.
Goldman’s aggressive expansion in prime brokerage and hedge fund financing has made the firm a top-three broker to 125 of the world’s 150 largest stock-trading clients – up from just 77 in 2019 – CEO David Solomon said in an earnings call this week. Lending to hedge funds hit an all-time high, helping push total financing revenue from trading clients to nearly triple 2019 levels.
Goldman’s timing has been nearly perfect, tapping into a boom in hedge fund leverage, which topped $5.5tn in Q1 2025, according to the US Office of Financial Research. The firm’s deep relationships with fast-trading shops like Jane Street and its appetite to finance large client bets have also positioned it as a go-to broker during a period of heightened macro and policy-driven volatility.
While the firm saw only modest growth in fixed income trading, and its asset management arm slightly missed forecasts, the prime brokerage and trading franchise continue to anchor Goldman’s hedge fund-facing business strategy.
