Global hedge funds struggled to post gains in September as surging bond yields, higher oil prices and sharp swings in AI shares rattled markets, according to prime brokerage notes and investors cited by Reuters.

Goldman Sachs Prime Services said global fundamental equity long-short funds lost 0.55% on average, though they still beat the MSCI World Index, which fell 1.3%. By contrast, computer-driven systematic equity long-short funds rose 3.46%, their best month this year.

Central bank action dominated the month. The US Federal Reserve raised interest rates for the first time since 2023 and signaled more hikes ahead, while the Iran war pushed oil higher and sent US Treasury yields to two-decade highs. Fears of a slowdown in AI spending also triggered sharp swings in crowded technology trades from the US to South Korea, complicating short-term trading.

In the US, hedge funds sold most sectors. Within technology, however, there was clear divergence: electronic equipment and hardware stocks were sold, while semiconductor equipment and software drew strong inflows, Goldman said.

In Asia, Morgan Stanley described performance as subdued amid economic uncertainty, estimating that Asian hedge funds across strategies fell 0.6% through September 25, compared with a 0.2% decline globally.

Some strategies profited from the moves in commodities and rates. Trend-following funds were among September’s biggest winners, with the Société Générale trend index gaining more than 4%. Winton Group said short fixed income and long energy positions largely drove the gains.

Looking ahead, the rate-hiking environment could widen the gap between funds. Experts noted that some funds benefit directly from higher short-term rates, while others face higher financing costs that can materially cut returns.

 End Notes

Source: https://www.reuters.com/world/china/hedge-funds-struggle-september-gains-rate-ai-swings-bite-2026-10-02/