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Hedge funds post weak September as yields, oil and AI volatility bite
The average hedge fund fell 0.55% in September, while computer driven equity long short strategies gained 3.46%.
Hedge funds posted a difficult September as rising bond yields, firmer oil prices and sharp swings in AI related stocks made trading more challenging, according to a Reuters report citing prime brokerage data and industry investors. Fundamental equity long short strategies were among those under pressure, with the average fund down 0.55% for the month, data from Goldman Sachs Prime Services showed.
Despite the broader setback, the same dataset showed some hedge strategies performed better than the market. Fundamental equity long short outperformed the MSCI World Index, which fell 1.3% in September, while systematic computer driven equity long short funds gained 3.46%, their strongest monthly return of the year.
Markets during the month were heavily influenced by central bank policy, Reuters reported. The Federal Reserve raised interest rates for the first time since 2023 and signaled further increases could follow, while US Treasury yields climbed to their highest levels in roughly two decades.
The report also pointed to inflation concerns tied to higher oil prices linked to the conflict with Iran, along with worries about the sustainability of AI related spending that triggered large moves in heavily owned AI stocks.