Global hedge funds suffered sharp losses this week as a sell-off in artificial intelligence-related stocks triggered widespread unwinding of positions, with Asia-focused managers among the hardest hit, according to a report by Reuters citing Goldman Sachs prime brokerage data.

Global fundamental long-short equity funds recorded losses every day this week, falling 2.9% in the period to 15 October. Despite the decline, the strategy remains up 14.3% year to date.

Wednesday saw particularly heavy losses across hedge fund strategies, with global fundamental long-short managers declining 0.9%. Asia-focused funds fell 2.6%, while technology-focused managers lost 2.0%.

Global systematic long-short and multi-strategy funds also declined by approximately 1% on the day.

The sell-off was driven by growing investor concerns over whether substantial investment in AI infrastructure will generate sufficient returns, compounded by higher-than-expected US inflation data that increased expectations of further interest rate hikes.

Semiconductor stocks and companies exposed to the AI supply chain were particularly affected, with South Korea's KOSPI index falling 8% on Thursday to a six-month low, while Taiwan's stock market declined more than 3%.

Goldman Sachs highlighted the unusual extent of simultaneous losses across hedge fund strategies.

"From COVID through end-2025, all three broad strategies never fell more than 80bps on the same day," the bank said, noting that such declines have now occurred three times in 2026 – on 4 February, 28 July and 15 October.

Asia-focused fundamental long-short managers have lost 6.8% in the first half of October, reversing a substantial portion of their earlier gains.

According to Goldman Sachs, the strategy has now surrendered more than half of the gains recorded at its late-June peak, when year-to-date returns exceeded 40%.