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Market rout wipes out gains from hedge funds that use equity long/short strategies

On Thursday, global equity long/short funds lost their gains of the year as stocks plummeted after the Trump Administration announced sweeping tariffs.

Goldman Sachs reported that the funds had fallen by 1.7% on the day. Long/short hedge fund performance was down 1.6% on the year as of Thursday.

Losses by hedge funds on March 10 are the second big bump in one month. These funds take long positions and bet against other stocks. The funds fell by 1.5% in the morning hours of March 10, after portfolio managers unwound trades on single stocks amid fears that tariffs could send the economy into a recession.

Hedge funds have already turned bearish with their

pessimism

A separate Goldman note last week said that the market is at a five-year high.

The bank's use of leverage was still high and near record levels over the last five years.

On Thursday, the tariffs shook global financial markets. The dollar and U.S. stock prices tumbled as investors fled to safe havens. S&P 500 fell 4.16% last, while Nasdaq dropped 5.3%.

(source: Reuters)