The losses were largely fueled by the aggressive unwinding of tech positions that had become too crowded to exit efficiently when market sentiment soured. While multi-strategy funds managed to limit their monthly decline to 2.2%, specialized stock pickers in the Asia-Pacific region faced a steeper 9.4% loss. Quantitative equity funds, which prioritize market performance metrics over fundamental corporate health, recorded a 5% drop. JPMorgan identified these quantitative firms as the most leveraged strategy in its tracking, operating with an assumed leverage level of 450%.

Goldman Sachs corroborated the difficult climate, noting that July marked the second-worst monthly performance for global stock pickers in four years, with Asia-based managers seeing their worst results on record. The pattern of dumping U.S. stocks during the mid-summer period is becoming a distinct trend; JPMorgan noted that this year’s de-grossing was more aggressive than any period since 2020 and 2022. Despite the recent volatility, hedge fund borrowing remains near five-year highs, suggesting that while specific momentum trades collapsed, the broader appetite for leverage has not yet vanished from the market.