A wave of prominent hedge funds reported significant losses in July, driven by a sharp reversal in artificial intelligence equities and rising market volatility.
The downturn marks a stark contrast to the double- and triple-digit returns many managers posted during the first half of the year, signaling a rapid shift in sentiment for tech-heavy portfolios.
The pressure was particularly acute for highly leveraged strategies.
Situational Awareness, a fund known for its concentrated bets on AI stocks, was forced to sell the majority of its equity portfolio at a steep discount to Ken Griffin’s Citadel.
The fire sale underscores the liquidity risks inherent in crowded, leveraged positions when market momentum reverses abruptly.
Systematic hedge funds are reporting their poorest trading results in almost 12 months, according to industry data.