Hedge funds slashed equity exposure last week in their largest sell off in more than six months, exiting energy and financial stocks as volatility spiked across global markets, according to a report by Reuters citing prime brokerage data from Goldman Sachs and JPMorgan.
The sharp reduction in risk saw managers unwind long positions and add fresh shorts across most major regions, with the exception of Europe. Goldman reported that energy names were sold at the fastest pace in four months, while exposure to oil and gas companies hit a three-year low.
The selloff coincided with a drop in crude oil prices below $60 a barrel following an International Energy Agency forecast for a potential supply glut. Hedge funds also pared back positions in US banks and financial services firms, leaving sector positioning broadly neutral, JPMorgan said.
Despite the heavy deleveraging, the S&P 500 ended the week up 1.7%, buoyed by regional bank earnings and optimism over US–China trade relations.
Goldman’s data also showed discretionary equity long-short funds fell 0.73% over the period, while systematic strategies gained 0.22%, reflecting relative resilience in quant-driven approaches.
