Hedge funds surrender half of 2025 gains amid market volatility

Hedge funds faced a sharp setback last week, with stock pickers and multi-strategy funds surrendering nearly half of their 2025 gains in a tech-driven selloff, Goldman Sachs reported.

Market turbulence, fueled by a weakening U.S. economic outlook and uncertainty over Trump’s tariff policies, triggered a steep drop in equities. The Nasdaq Composite entered correction territory, with tech, media, and telecom stocks—where hedge funds were heavily long—hit hardest.

A JPMorgan note confirmed hedge funds were highly exposed to tech and growth stocks, worsening the decline. The S&P 500’s tech sector is now down 8% year-to-date, second only to consumer discretionary stocks, which have fallen over 9%.

Stock-picking hedge funds have struggled in 2025, with U.S. equity-focused funds dropping 1.4% on Thursday, pushing year-to-date performance to -0.5%. Multi-strategy funds, typically structured to hedge losses, have also struggled, losing money in 18 of 29 sessions since late January—one of their worst streaks on record, according to Goldman Sachs.