Hedge or risk management funds sold the most expensive stocks last week at the fastest pace since the January 2021 meme stock frenzy, Bloomberg reports.
Brokerage Goldman Sachs revealed that hedge funds "aggressively de-risked long and short positions" in the week ended July 19. That contributed to the S&P 500 and Nasdaq Composite's biggest declines in the period since April.
Investment bank Goldman Sachs points out that the funds have been selling shares since May as they want to have more cash ahead of the US presidential election scheduled for early November.
"Overall, the week was full of painful withdrawals and sharp reversals among mid- and large-cap stocks, as well as AI winners," the bank said in a report.
Goldman Sachs says Wednesday was the peak of risk-off. Funds' net long-short leverage, often seen as a barometer of risk appetite, fell to 49.8 percent last week, the lowest since March 2023.
The S&P 500 index of information technology companies fell 5.1 percent last week, while the overall market fell nearly two percent over the same period.
