Equity-focused hedge funds suffered their worst daily performance in almost a year on Wednesday, as a sharp sell-off in technology stocks triggered losses across crowded trades, according to a report by Reuters citing a client note from Goldman Sachs.
The pullback, sparked by investor concerns around artificial intelligence disruption following the launch of a new legal AI tool from Anthropic’s Claude model, prompted a rotation out of technology and into defensive names such as consumer staples, Goldman said.
Hedge fund strategies concentrated in technology, telecoms and media declined by as much as 2.8% on the day, a meaningful setback given that many funds need to generate 1–2% per month to deliver double-digit annual returns after fees. Systematic equity strategies and fundamental stock pickers also gave up ground, posting losses of 0.76% and 0.84%, respectively.
Multi-strategy hedge funds were among the hardest hit, with equity books down 1.9%, marking their worst day since April 2025, when markets were rattled by US tariff announcements. Goldman attributed the losses to a momentum-driven sell-off, as funds rushed to exit concentrated long positions in popular technology names.
Despite the setback, Goldman noted that multi-strategy funds remain up 3.9% year to date, underlining the resilience of diversified platforms even as volatility rises.
