Hedge funds face significant October losses amid tech selloff

Major hedge funds experienced widespread losses in October, driven by a sharp selloff in technology stocks, rising bond market volatility, and geopolitical uncertainty. According to data from Goldman Sachs and Bloomberg, fundamental and systematic strategies both recorded monthly losses exceeding 3%, marking a significant industry downturn.

Technology and AI-related equities were primary drivers of the decline, with approximately $20 billion in tech stocks sold over a two-week period. Specific firms reported notable declines: Marshall Wace’s Eureka strategy fell 5.4%, Millennium Management’s flagship fund declined 2.3%, and ExodusPoint Capital Management lost 2.4%. Credit-focused managers also faced pressure, with Arini Capital Management’s flagship strategy down 12.1% through late October.

While many equity-focused funds struggled, certain asset classes and strategies showed resilience. Real estate investment trusts (REITs) rose 4.8% in October, and commodities increased by 4.1%, supported by crude oil prices remaining above $100 a barrel due to tensions in the Persian Gulf. Additionally, Citadel’s Wellington fund gained 1.7%, and the quantitative fund Quantedge rose 7.2%, benefiting from diversified strategies in commodities and fixed income.