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Hedge funds have reduced their bets for capital and reduced their loans from banks as they are struggling to deal with increased market instability caused by US President Donald Trump’s global trade war.
Sharp Stock Exchange In recent weeks, Trump’s tariff concerns have hit the sector particularly difficult. The VIP industry industry for Goldman Sachs Hedge Industry, which follows the most popular purchases of the funds, such as AD Group AppolinChipMaker Broadcom and Energy Group Vistra has reduced 12.5 % since February 19-when the S&P 500 hit a record high-end with a drop of 8.6 % in the blue chip index.
As a result, hedge fund managers aggressively reduce the size of their supporting bets as they try to limit losses by reducing the amount they borrow from banks to buy or bet on stocks.
The reduction in gross positions – the combination of bets and bets against actions – from hedge funds on Friday and Monday was the largest in four years, according to a report by Goldman Sachs and one of the biggest in the past 15 years.
“There is a lot of pain there,” said CEO of a large hedge fund. “The only way to defend yourself in the environment today is to reduce your power.”
Among the funds affected during the volatility of the market is the Millennium of Izzy England, which runs funds nearly $ 75 billion. He lost 1.4 % last week to Thursday, according to a person who saw the number, after already dropping 0.8 % this year by the end of February.
Ken Griffin’s $ 66 billion -$ 66 billion -dollar hedge quarterfond dropped by 0.8 % this year by the end of February, although Baliani was 3.5 % in its main fund.
Millennium and Citadel declined to comment.
Trump’s involved in US trade partners’ tariffs have used markets, while punishing immigration and reducing public sector has led to fears that inflation may increase and GDP growth may slow.
The so -called Wall Street fear meter, which measures market expectations for stock prices, has risen to the highest level since August last year.
Three people working on different multi-management funds for hedge use numerous teams of traders, large amounts of support and close risk management-saying that the reduction in positions is the largest they have seen by the end of 2018, when markets have sold out sharply.
A rapid reduction in leverage of multi-manager hedge funds could lead to what stocks fall more than otherwise, “boosting market movements,” Bank of England Governor Andrew Bailey said last month.
Hedge fund directors say the current environment has led to a more unstable market in which it is more difficult to choose which actions will do well or bad in the short term.
“(There was a) change of the paradigm which means they will lead different actions, changing the premiums for assessment,” said one CEO of a multi-management hedge fund.
Actions in the most popular Goldman Sachs Hedge Fund Index have begun to surpass the most popular long positions, causing losses for managers.
The basic long -term capital funds lost almost 6 % since February 18, according to Goldman Sachs, according to FT. On a 14-day wheel, it marks the largest loss of funds from top to country since May 2022.
“These changes in politics were huge and fast,” one CEO said. “Now it’s a different environment. We’ve never seen this. “
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