Hedge funds increased bullish equity positioning last week as investors moved to position for a potential de-escalation in US–Iran tensions ahead of weekend geopolitical developments, according to a report by Reuters citing client data from Goldman Sachs.
The shift marked the first time in eight weeks that hedge funds were net long equities, with managers reducing short exposure and re-establishing long positions across global markets. The move came amid expectations of a possible ceasefire, which helped support risk appetite before renewed volatility emerged at the start of the week.
Goldman data suggested that systematic strategies, including commodity trading advisors (CTAs), could generate significant equity buying in the near term, with estimated flows of around $40bn into S&P 500 exposure over the month. The anticipated inflows reflect model-driven buying linked to recent shifts in price trends and volatility conditions.
At the same time, discretionary macro funds and long-only participants also began re-entering equity markets after largely staying on the sidelines since the onset of the conflict. While broader positioning turned more constructive, single-stock exposure remained mixed, with hedge funds still holding short positions in selected names.
Technology remained a notable area of selling pressure, with hedge funds reducing exposure to the sector at the fastest pace in five years. Software accounted for around 60% of the selling, highlighting growing differentiation within AI-related trades as investors reassess valuation and earnings risk across sub-sectors.
Buying was broad-based geographically, with flows led by Europe and emerging markets in Asia in dollar terms, indicating a gradual diversification away from US-heavy positioning even as US equities continue to anchor global risk sentiment.
Despite volatile conditions, Goldman data showed global stock-picking hedge funds delivered gains of approximately 4% over the week, underscoring the continued role of dispersion and event-driven moves in generating performance opportunities.
