Goldman hedge fund net leverage falls 4.2 points to 73.4% in October

Hedge funds cut net leverage across Goldman Sachs' prime brokerage book by 4.2 percentage points to 73.4% in October, the steepest monthly decline in seven months, according to Hedgeweek. The data cover Goldman's clients, not the industry as a whole.

Funds were net sellers of global equities by the largest dollar amount in seven months, with long sales outnumbering short sales four to one, the same data show. About $20 billion of technology stock was sold over two weeks, close to the $23 billion recorded during July's market unwind. Five consecutive sessions of selling in AI-related equities between Oct. 8 and Oct. 14 erased all cumulative net purchases of the sector since the start of 2025.

For allocators comparing two long-short managers, the four-to-one ratio of long sales to short sales suggests most of the leverage cut came from closing positions rather than adding hedges. Single-stock positions fell while macro products and index instruments were added. The largest net outflows came from information technology, industrials and materials, while consumer discretionary, real estate and healthcare attracted buying.

European equities were an exception. Hedge fund overweights to European equities reached a one-year high of 3.5%, with the UK, France and Spain among the most actively bought markets, according to the Goldman data. Funds reduced equity exposure overall while adding to Europe.

On Goldman's numbers, the 4.2-point fall puts September's net leverage at 77.6%. Goldman, Morgan Stanley and JPMorgan accounted for $52 billion of the $67 billion in nine-month equities revenue, per a CNBC analysis cited by Hedgeweek, as Alternatives previously reported.