Hedge Funds Reduce Technology Exposure at Record Pace
Hedge funds cut their technology stock positions at the fastest rate in at least a decade during the five trading sessions ending on October 15, according to data from Goldman Sachs Inc.’s prime desk. The reduction was the most rapid observed over any comparable ten‑year window.
The sell‑off occurred alongside a sharp decline in global technology shares. The Nasdaq 100 index dropped 5.5%, marking its worst weekly performance since April 2025, as the AI‑driven trade unwound across markets. Within the MSCI World Index, technology emerged as the worst‑performing sector for the period covered by Goldman’s data.
Goldman’s note highlighted that gross trading activity among hedge funds fell at the fastest pace in nearly three months. Global equities were net sold at a level two standard deviations away from the average flows of the past year. Information technology led the outflows, registering the largest reduction in gross positions in a two‑month span, while the semiconductor sub‑sector recorded the biggest dollar loss among all sectors.
Despite the aggressive trimming, hedge funds continue to hold a substantial technology exposure. Net allocation to the sector remains at 23.5% of the global Prime book, positioning the exposure in the 90th percentile relative to the previous five years. Concurrently, hedge funds’ net leverage—measuring the balance between long and short positions—declined to a one‑year low of 48.6%, indicating a more cautious overall stance.