Hedge funds: low exposure
GS Prime data shared on social shows hedge funds’ net exposure at about 51%, which sits in the 21st percentile versus the last three years. (x.com) The post said many funds remain underexposed after recent volatility. (x.com)
Hedge funds are carrying relatively light stock-market risk even after April’s rebound, with Goldman Sachs prime brokerage data showing net exposure near 51%. (x.com) Net exposure is a fund’s long positions minus its short positions, and the Goldman figure sits in the 21st percentile of the past three years, according to the chart shared by Connor Bates on April 16. Goldman’s own prime-services research has described net leverage as near three-year highs at the end of 2025, making the recent drop notable against that backdrop. (x.com) (goldmansachs.com) The pullback followed a violent stretch in March, when Goldman said March 7 and March 10 were among the worst two trading days for hedge fund performance in years and forced de-risking across several strategies. Reuters reported on April 13 that hedge funds then rushed back into bullish stock bets ahead of weekend United States-Iran talks, citing Goldman client notes. (goldmansachs.com) (money.usnews.com) That leaves funds in an awkward middle ground: performance has improved, but positioning is still cautious. Reuters reported on April 16 that hedge funds are on track for their best monthly returns in more than a decade after recovering from the March downturn tied to the Iran war. (money.usnews.com) The caution stands out because allocators entered 2026 in a much more optimistic mood. Goldman said on January 29 that almost half of allocators planned to increase hedge fund allocations in 2026, while just 4% planned to cut them. (goldmansachs.com) Goldman also said hedge funds returned an average 11.8% in 2025 after 11.9% in 2024, and more than 90% of allocators said their hedge fund portfolios met or beat expectations last year. Those returns came with lower market beta, or sensitivity to broad market moves, than in earlier years, according to Goldman’s February 12 industry note. (goldmansachs.com) Low net exposure does not mean hedge funds have gone defensive across the board. Goldman said gross leverage for its full prime brokerage book rose for a third straight year to a record by the end of 2025, which means many funds were still running large books while keeping longs and shorts closer together. (goldmansachs.com) That matters for markets because underexposed funds can still buy more if volatility fades, but they can also stay hedged if another shock hits. For now, the picture from Goldman’s prime data is simple: hedge funds have repaired returns faster than they have rebuilt risk. (x.com) (money.usnews.com)
