Hedge funds increased bearish positions on US equities last week as escalating geopolitical tensions and market volatility weighed on investor sentiment, according to a report by Bloomberg citing data from Goldman Sachs.
The bank’s prime brokerage unit reported that hedge funds raised short exposure to equity exchange-traded funds by 8.3% in the week to 6 March. The pace of new short positioning was the second-fastest recorded in the past five years.
The shift comes as concerns about the conflict in the Middle East have heightened fears of rising oil prices and renewed inflationary pressure, prompting a broader sell-off in equities. The S&P 500 Index declined about 2% over the week, while the Cboe Volatility Index (VIX) climbed to its highest level since the market turbulence linked to tariff disputes earlier in the year.
Despite the increase in bearish positioning, hedge funds have not completely retreated from the US equity market. Goldman’s data showed managers increased exposure to individual stocks for the first time in five weeks, suggesting many are selectively buying companies they view as undervalued while hedging against broader market risk.
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