Systematic hedge funds are reporting their poorest trading results in almost 12 months, driven by a sharp reversal in artificial intelligence equities and heightened market volatility.
Goldman Sachs noted that many managers were caught on the wrong side of crowded long trades as the recent tech selloff accelerated.
The performance slump highlights the vulnerability of quantitative strategies that rely on momentum and trend-following signals.
As AI-related stocks faced heavy selling pressure, these funds experienced significant mark-to-market losses, compounding the stress on a sector that had previously benefited from the technology rally.
This development coincides with a broader deterioration in global equity sentiment.
A wide-ranging selloff has spread from South Korean exchanges to emerging-market assets and technology-heavy indices, fueled by growing investor anxiety over valuation levels and macroeconomic uncertainty.