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Hedge Funds Drop 2.9 Percent in a Week as AI Bets Unwind

Goldman Sachs told clients that stock-picking funds lost money every day this week. Asia-focused managers fell 6.8 percent in the first half of October and gave back over half their gains since June.

By Orbit Post2 min read
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Hedge Funds Drop 2.9 Percent in a Week as AI Bets Unwind
Photo: Jacob Ehnmark, CC BY 2.0, via Wikimedia Commons (https://commons.wikimedia.org/wiki/File:Market_centre_in_Tokyo_stock_exchange.jpg)

Key points

  • TOKYO.
  • The note, reported by Reuters on Friday, October 16, said stock pickers globally lost 0.9 percent on October 15 alone.
  • Goldman said October 15 was only the third day this year when all three broad fund strategies fell more than 80 basis points on the same day.

TOKYO. Global hedge funds lost money every day this week as the AI selloff spread from chip stocks into the funds that trade them. A Goldman Sachs prime brokerage note put losses for global fundamental long-short funds, the stock pickers, at 2.9 percent for the week to October 15. Asia-focused managers took the worst of it.

The note, reported by Reuters on Friday, October 16, said stock pickers globally lost 0.9 percent on October 15 alone. Asia-focused managers fell 2.6 percent that day. Tech-focused funds fell 2.0 percent. Systematic long-short funds and multi-strategy funds each fell about 1 percent.

Goldman said October 15 was only the third day this year when all three broad fund strategies fell more than 80 basis points on the same day. The other two were February 4 and July 28. From COVID through the end of 2025, that had never happened once.

Asia paid the highest price

Asia-focused stock pickers have lost 6.8 percent in the first half of October. The slide wiped out more than half of what they had gained since their late June peak, when they were up more than 40 percent for the year.

The region's markets explain the pain. South Korea's Kospi fell 8 percent on Thursday to a six-month low. Taiwan stocks lost more than 3 percent. Both markets carry heavy weight in semiconductor and AI supply chain shares, and those are the shares investors sold first. Progress reported by China's ChangXin Memory Technologies on a new DRAM design added pressure on memory makers, as traders priced in harder competition.

Why the bets unwound

Two forces hit at once. Hot US inflation data this week raised the odds of further rate hikes, which lifts the borrowing costs behind the AI building boom. At the same time, more investors asked whether the huge spending on data centres and chips can pay off soon enough. Funds were crowded into the same AI trades, so the exit was crowded too.

The funds are still up 14.3 percent for the year, Goldman said. This was a bad week inside a good year, not a collapse.

Friday brought a partial rebound

Asian stocks bounced on Friday as calm returned. Japan's Nikkei rose 1.8 percent, taking back part of Thursday's near 5 percent fall. South Korea's Kospi climbed 2.8 percent after its near 8 percent plunge. Taiwan rose 0.7 percent and mainland Chinese blue chips edged 0.3 percent higher. Gold eased back from Thursday's high, Brent crude drifted lower toward 105 dollars, and the dollar headed for its first weekly loss in five weeks as US yields fell.

Timeline

  1. Oct 15, 2026Global stock pickers lose 0.9 percent in a day, Asia-focused managers fall 2.6 percent, and South Korea's Kospi drops 8 percent to a six-month low.
  2. Oct 16, 2026Reuters reports the Goldman Sachs note in Tokyo. Asian stocks rebound the same morning, with the Nikkei up 1.8 percent and the Kospi up 2.8 percent.

Sources