According to Goldman Sachs, hedge funds experienced their worst monthly underperformance versus the S&P 500 in July in over twenty years. Strategists led by Ben Snider noted that July marked one of the sharpest de-grossing episodes of the past decade. Funds reduced positions in several AI stocks, including semiconductors and mega-caps. In the second quarter, hedge funds had delivered strong gains driven by popular AI stocks, pushing hedge fund crowding to a record. Despite the volatility, US equity long/short hedge funds returned 10% through mid-August.
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