Hedge funds fall 1.4% in October as tech selloff weighs

The HFRI Equity Hedge (Total) Index fell 2.4 per cent. Fundamental growth strategies dropped 5.6 per cent and technology-focused funds lost 4.8 per cent. The declines accompanied a 5.3 per cent fall in the Nasdaq Composite, its worst monthly performance since March 2025. The Dow and Russell 2000 ended October higher. Intel, Alphabet, Meta Platforms and Nvidia were among the companies with the heaviest falls, HFR said.

Event-driven strategies slipped 0.2 per cent overall. Activist funds gained 3.6 per cent and merger arbitrage rose 0.1 per cent, while credit arbitrage lost 2.7 per cent and distressed and restructuring strategies fell 1.8 per cent. The HFRI Macro (Total) Index declined 1 per cent, with discretionary thematic strategies down 3.2 per cent and commodity funds off 1.9 per cent. Systematic trend-followers were nearly flat, losing 0.1 per cent.

Relative-value strategies provided a modest offset, gaining 0.2 per cent. Fixed-income sovereign funds rose 5.3 per cent, yield alternatives gained 4.6 per cent and asset-backed strategies added 2.1 per cent. HFR’s liquid-alternative measures also fell: the HFRX Global Hedge Fund Index lost 1.2 per cent and the HFRX Absolute Return Index declined 0.4 per cent.

Returns varied sharply across funds. The top decile gained an average 7.7 per cent, while the bottom decile lost 13.2 per cent, widening the monthly spread to 20.9 per cent from 14.6 per cent in September. Over the 12 months to October, the gap reached 61.2 per cent.

HFR said managers had positioned for policy changes after the US midterm elections, which shifted control of Congress to the Democrats. “Hedge funds were positioned for rapid policy shifts heading into the midterms, and the result guarantees that volatility will remain elevated over the intermediate term,” HFR president Kenneth J Heinz said. He cited AI regulation, data centres, tariffs, taxes, interest rates and the Iran conflict as factors that will drive market performance.