According to a Goldman Sachs note to clients, hedge funds are aggressively repositioning their portfolios by piling into bets against U.S. shares and emerging market stocks in Asia. At the same time, they are wagering that European shares will rise.
📉 THE MASSIVE SHORT:
- Historic Selling: Global stock selling reached new highs last week, marking the largest net selling since April 2025.
- Consecutive Shorts: Speculators have now shorted equities for the fifth straight week.
- The Targets: Funds heavily sold both index-tracking products (like ETFs) and single stocks. The most sold sectors globally were consumer discretionary, tech, and financials.
- Asian Exodus: Hedge funds explicitly ditched long positions and added short bets in emerging markets Asia.
🛡️ THE DEFENSIVE ROTATION:
- The Energy & Staples Play: Consumer staples (which people need week-to-week) and energy were the only stock sectors where hedge funds maintained long positions, betting that prices would rise.
- Macro Fears: This rotation comes as global shares slumped for a third consecutive week, driven by climbing bond yields and fears that the Iran war would keep upward pressure on oil prices and spark inflation.
- De-risking: Gross leverage, which indicates how much hedge funds are trading, declined to 309.8% for the week.
💡 THE BOTTOM LINE: The market environment is sharply dividing fund performance. While traditional hedge fund stock pickers have lost 3.85% so far in March (remaining up just 0.16% year-to-date), systematic stock traders capitalized on these short bets and are up just over 6% for the year. The “smart money” is clearly shifting its weight away from U.S. tech and Asian equities, seeking shelter in Europe, energy, and daily necessities.
👇 Macro & Equity Investors: With hedge funds pivoting hard to Europe and hiding in consumer staples and energy, is the US tech run officially over, or is this just a temporary geopolitical panic?