Hedge funds around the world offloaded stocks for a fifth consecutive month in August, and at their fastest pace since March 2022, Goldman Sachs said in a note seen by Reuters.
Investors around the world switched to risk-off mode amid a meltdown in global equity markets in early August, triggered by U.S. recession fears and the unwinding of massive Japanese yen carry trade.
The accelerated sell-off was mainly driven by growing short-selling in single stocks, along with mild selling in long positions, the bank said this week.
The selling was led by sectors such as tech, industrials and consumer discretionary.
Region-wise, North America and Japan led the sell-off, with Japanese stocks suffering the heaviest selling since December 2018, according to the bank. It, however, did not disclose how large the sell-off was.
Japan's Nikkei index fell 13% in its worst one-day sell-off since 1987 on Aug. 5, prompting Bank of Japan officials to play down the chances of a near-term rate hike.
However, after a three-day market rout at the beginning of August, global markets, and hedge funds' performance, recovered quickly. The MSCI World Index rose 2.5%, and the S&P 500 climbed 2.3%, although the Nikkei lost 1%.
"Fundamental long/short (funds) returns experienced a sharp drawdown in early August but finished up on the month as markets bounced back," Goldman Sachs said.
As a result of the bounce back, global fundamental long/shot funds were up 0.9% in August, and 9.1% for the first eight months, it added.
Computer-driven systematic funds ended the month up 2% and gained 18.4% for the Jan-Aug period.
Reuters earlier reported global hedge funds posted an average 1.3% return for August, citing JPMorgan data.
Europe had modest selling in August, and within Asian emerging markets, South Korea and Taiwan were most sold, while hedge funds bought Chinese and Indian equities, according to Goldman Sachs.
© 2025 Thomson/Reuters. All rights reserved.