Global hedge funds suffered significant losses this week after a sudden correction in artificial intelligence (AI) investments triggered widespread selling, according to a recent report from the Goldman Sachs prime broker business. The sharpest impact was felt by funds focused on Asia.
Figures and timing
- Goldman Sachs reports that global fundamental long-short funds did not finish a single day in positive territory during the week, producing a weekly loss of 2.9 percent through October 15. Year-to-date, these funds remain up 14.3 percent.
- On Wednesday, Asia-exposed managers fell 2.6 percent while technology-focused funds declined 2.0 percent. Systematic long-short and multistrategy funds weakened by roughly 1 percent.
Drivers of the sell-off
The selling was partly fuelled by US inflation data that came in hotter than expected, reinforcing expectations for further interest-rate increases. Investors are also increasingly questioning whether the massive investments in AI will pay off within a reasonable timeframe, while elevated inflation keeps funding costs high.
Regional impact — Asia and semiconductors
Markets exposed to the semiconductor sector suffered the largest losses. South Korea’s KOSPI plunged 8 percent on Thursday, falling to a six-month low, and Taiwanese equities fell by more than 3 percent.
Unusual synchronized drawdowns
Goldman Sachs noted that since the start of the COVID-19 pandemic through the end of 2025 there had not been a day when all three main strategy types simultaneously experienced daily losses exceeding 80 basis points. This year, however, that scenario has occurred three times: February 4, July 28, and October 15, 2026.
Performance of Asia single-stock funds
Funds focused on Asian single stocks have logged a 6.8 percent loss so far in October. Compared with their end-June peak — when they were still more than 40 percent up year-to-date — they have given back more than half of those earlier gains.
Context and disclosures
The article notes that the investment themes will be discussed in more detail at the Portfolio Professional Investment Day conference. It also stresses that the report does not constitute investment advice. An AI assistant participated in preparing this article; the final content was edited and verified by the journalist.
