Goldman Sachs says Asia-focused fundamental long-short equity hedge funds are
suffering the largest single-month drawdown on record after a broad selloff in
AI-theme stocks erased most concentrated gains. As of July 28, these funds
averaged an 18.6% decline month-to-date. They had been among the best-performing
funds in 1H after early bets on AI hardware leaders SK Hynix and Samsung
Electronics, with some funds posting gains above 100%. Since a July 22 peak when
year-to-date returns reached about 40%, the group has given back roughly 21
percentage points. Goldman says crowded AI trades that drove the 1H rally are
the primary cause of this month’s unusually large losses; funds with greater AI
exposure suffered larger declines. Facing the volatility, managers have been
taking profits and cutting risk: as of July 27, Asian hedge funds reduced
exposure for eight consecutive trading days, with the five-day cumulative
exposure cut hitting a record high.
