Goldman Sachs: Asia-focused equity hedge funds experience largest monthly drawdown amid AI stock sell-off

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Goldman Sachs reported that value investing in crypto has attracted attention as Asia-focused equity hedge funds experienced their worst monthly drawdown on record. As of July 28, 2026, these funds declined 18.6% in July, reversing prior gains from AI hardware bets. The AI trade, once a top performer, is now driving the sell-off. Funds with heavy AI exposure are suffering the largest losses, and Asian hedge funds have reduced their positions for eight consecutive days. On-chain trading signals show a record five-day decline in positions.
ME AI messages: A Goldman Sachs report shows that Asia-focused equity hedge funds are experiencing the largest single-month drawdown on record, due to widespread selling of AI-themed stocks, which has erased most of the gains previously generated by the market’s concentrated bets on this sector. Goldman Sachs stated that, as of July 28, Asia-focused fundamental long/short equity hedge funds declined an average of 18.6% this month. In the first half of this year, these funds became among the best-performing globally by prematurely betting on AI hardware leaders, including South Korean chipmakers SK Hynix and Samsung Electronics. Some funds achieved returns exceeding 100%. However, the market has now reversed sharply. Goldman Sachs noted that since hitting a peak year-to-date return of 40% on July 22, these funds have given back 21 percentage points of their year-to-date gains. Goldman Sachs pointed out that the crowded AI trades that drove strong fund performance in the first half are now “the primary factor behind the unusually large drawdown this month.” Funds with higher exposure to AI themes suffered greater losses. In response to the market volatility, hedge funds have been taking profits and reducing risk. Goldman Sachs data shows that, as of July 27, Asia-focused hedge funds have reduced exposure for eight consecutive trading days, with the “five-day cumulative reduction in total exposure” reaching a record high. (Jinshi) (Source: BlockBeats)
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