Trend-Following Hedge Funds Post Worst Week Since 2024 on AI Return Doubts, Goldman Says

Trend-following hedge funds suffered their worst weekly performance since 2024 as doubts over returns on massive AI spending fueled volatility across equity and bond markets, according to a Goldman Sachs report obtained by Reuters on Monday. The Nasdaq 100 fell 5.5% last week, its steepest weekly drop since April 2025. Meta dropped 10% for the week; despite strong earnings, the company said it needs to raise more capital to fund AI investments, unsettling investors. Bond markets also swung as investors moved into U.S. Treasuries and sold debt of weaker economies such as France. Goldman said systematic long/short strategies tracking market trends fell 2% last week, the worst since 2024, while fundamental long/short strategies lost 1.1%. Month-to-date, fundamental strategies are down 3.8% but up 8.8% this year; systematic strategies are down 1.1% in October but up 18.7% year-to-date. Goldman's prime brokerage reported $20 billion in tech stock sales over the past two weeks, approaching the $23 billion seen during July's major deleveraging.