Hedge funds reduced global equity exposure last week at the fastest pace since late June, according to Goldman Sachs’ Prime Services desk, with long sales outpacing new shorts by a wide margin.
The selling, which marked the first weekly decline in a month, represented a 2.3 standard deviation move relative to the past year’s trading patterns. Long positions were trimmed at a ratio of 1.8 to 1 versus new short positions, indicating investors were primarily paring back existing holdings rather than initiating fresh bearish bets.
All major regions experienced outflows, with North America and Asian emerging markets leading in dollar terms. The technology sector bore the brunt of the selling, recording its largest percentage de-grossing in more than two years. Energy was the sole bright spot, attracting its strongest net inflows since early 2021 and extending a streak of net buying to 12 of the past 13 weeks.
Net leverage across Goldman’s Prime Services book fell to 76.8%, placing it in the 27th percentile of the past year. The decline suggests positioning was not stretched prior to the latest round of selling, leaving room for further adjustments if sentiment deteriorates.
