News Digest: Hedge Funds Suffer Worst Monthly Losses in Four Years Amid Iran War Turmoil
April 14, 2026
Global hedge funds recorded their steepest monthly drawdowns in more than four years during March 2026, as the Iran war triggered a sweeping wave of volatility across equities, currencies, commodities, and interest-rate markets. The pain arrived after an exceptionally strong 2025, leaving the industry grappling with a sharp reversal of fortunes at the start of the new year.
Funds responded defensively, offloading global equities for a fourth consecutive month at the fastest pace seen in 13 years, according to Goldman Sachs research. The broader market offered little comfort: the S&P 500 fell 4.63% during the quarter, while the Nasdaq 100 declined 4.87%. Goldman described the March drawdown as the most severe since January 2022, when a hawkish Federal Reserve and geopolitical tensions last rattled financial markets on a comparable scale.
Large multi-manager platforms bore the brunt of the losses, with several flagship funds posting monthly declines of between 1% and 4.5%. Some strategies fared worse than others. While fixed income funds were among the hardest hit, tactical and equities-focused strategies showed greater resilience. The data also revealed that larger multi-manager funds tended to underperform smaller peers during the month.
Sector exposure proved decisive. Technology, media, and telecommunications strategies were among the worst performers, declining nearly 8% in March alone and almost 12% for the full quarter. Healthcare-focused funds held up comparatively well.
Geographically, Asia-based managers suffered the steepest losses in March, though they remain the only regional cohort in positive territory year-to-date. European and U.S. managers both ended the first quarter in the red.
The sole bright spot was systematic, quantitative strategies, which bucked the broader trend by posting modest gains through disciplined, model-driven trading rather than directional market exposure. Gross leverage across the industry rose to near-record levels, underscoring the scale of risk that managers had accumulated heading into the downturn.
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