Hedge funds suffered a significant setback last week, with stock pickers and multi-strategy funds surrendering nearly half of their 2025 gains in a sharp, tech-driven equity selloff, according to a note from Goldman Sachs.
The market turbulence was fuelled by a weakening US economic outlook and uncertainty over former President Donald Trump’s tariff policies, triggering a sharp decline in Wall Street equities. The Nasdaq Composite Index confirmed a correction from its December peak, with technology, media, and telecommunications stocks — where hedge funds had highly concentrated long positions — bearing the brunt of the decline.
A separate JPMorgan note confirmed that global hedge funds entered the week heavily long on tech and growth stocks, exacerbating the selloff’s impact. The S&P 500’s technology sector has now posted an 8% year-to-date loss, making it the second-worst performer after consumer discretionary stocks, which are down over 9%.
According to Goldman Sachs, hedge funds focused on stock-picking strategies have struggled to stay afloat in 2025. By the end of Thursday’s selloff, US stock-picking hedge funds were down 1.4% on the day, bringing their year-to-date performance to negative 0.5%.
Funds employing multi-strategy approaches, typically designed to mitigate losses across different investment styles, also encountered challenges. Goldman Sachs noted that multi-strategy hedge funds have lost money in 18 out of 29 trading days since 27 January, marking one of the worst streaks on record for this segment.
