Systematic hedge funds had their worst week since 2024 in the five sessions through Friday, October 23, 2026, according to data from the Goldman Sachs prime brokerage desk reported by Reuters on Monday, October 26, 2026. The S&P 500 barely moved. The index closed the week at 7,623.68, down 0.46%, and is still up more than 11% so far this year.

The prime brokerage is the Goldman unit that handles trading and financing for hedge fund clients. A separate note from the same bank warns that trend-following funds may have to sell tens of billions of dollars of US equities.

What happened to the hedge funds

Systematic long-short funds lost 2% in a single week. They remain up 18.7% year to date. These funds buy the stocks they are bullish on and short the ones they are bearish on, using mathematical models to pick both sides.

Fundamental long-short funds, which take the same kinds of positions but select them by analyzing company financials and outlooks, lost 1.1% on the week and 3.8% since the start of October. That cut their annual gain to 8.8%. Trend-following funds, which buy what is rising and sell what is falling, had their worst week in two years.

Over the two weeks through October 23, 2026, Goldman’s prime brokerage recorded roughly $20 billion in sales of technology stocks, just short of the $23 billion sold in July 2026. Across the accounts the bank tracks, US equities were net sold for the third week running.

The financial website ZeroHedge, which picked up Goldman’s analysis, compared the episode to “DeepSeek Monday” on January 27, 2025, when the debut of the low-cost Chinese model sent Nvidia down roughly 17% in a single session. On that reading, only that day and the Covid crash of 2020 offer a comparable precedent. The figure underlying the comparison is not public and could not be independently verified.

Why the index barely noticed

The gap between fund performance and index performance comes down to sector rotation. The S&P 500 communications sector lost 6.2% on the week, dragged down by Meta, which fell 9.4%.

Meta’s quarterly results, released on October 21, 2026, beat revenue expectations but reignited doubts about the returns on its artificial intelligence spending. On Monday, October 26, 2026 the company announced a capital raise of up to $95 billion.

The rest of the market rose over the same period. Energy gained 1.6% on the back of oil, the Dow Jones added 0.4% and the Russell 2000 small caps rose 2%.

Money did not leave the market. It moved out of the AI names most heavily owned by hedge funds and into the rest of the exchange. For the index the net effect was minimal. For funds concentrated in those names it was severe.

What CTAs are and why they can amplify selling

CTAs (Commodity Trading Advisors) are funds that trade systematically, almost always through futures, contracts that let you bet on the future price of an index without buying the individual stocks. They follow trend following logic: they add to positions when a market rises steadily and cut them when the trend reverses.

These funds take their cues from price, not from company accounts. Every model sets technical thresholds, price levels often calculated from moving averages over recent months. If the index falls below one of them, the model sells automatically. That selling pushes prices lower and can trip other funds’ thresholds, triggering further selling. Investment banks therefore publish regular estimates of CTA flows under different market scenarios.

According to ZeroHedge on Monday, October 26, 2026, a note titled “Pulse Check” by Goldman Sachs derivatives strategist Lee Coppersmith estimates that CTAs have roughly $65 billion of US equities to sell if the S&P 500 declines. The note is restricted to professional clients, and neither its price thresholds nor its time horizon are known. ZeroHedge also notes that at the October 23, 2026 close the S&P 500 was about 2.5% below its all-time high, a narrow gap that, on Goldman’s analysis, does not rule out a sharper drop if CTAs start selling.

What it means for investors

For the individual investor, what matters is the effect on prices rather than the fate of any particular fund. Anyone holding ETFs or funds tracking the S&P 500 or the Nasdaq owns precisely the technology stocks that have been sold most heavily in recent weeks. According to calculations by US broker Firstrade published in 2026, the ten largest companies account for roughly 40% of the S&P 500. After a stretch in which hedge fund leverage climbed to record highs, forced selling can move prices more than company fundamentals would justify.

Three signals are worth watching in the weeks ahead:

  • whether the S&P 500 holds current levels, since a decline spreading beyond AI-linked names would make the CTA selling scenario more likely;
  • the performance of the large artificial intelligence stocks, starting with Meta and Nvidia;
  • Treasury yields: the 10-year closed at 4.99% on Friday, October 23, 2026, according to First Trust data, and higher rates weigh most heavily on stocks valued on future growth.

The practical first step is to check how exposed your portfolio is, including through ETFs, to the handful of technology stocks driving the index. A flat index does not mean a calm market: last week’s losses were concentrated in a few stocks, and those are precisely the ones that weigh most in portfolios.

Editor’s note

This article was originally published in Italian on money.it by Dimitri Stagnitto on October 27, 2026 as «Hedge fund: peggior settimana dal 2024. Goldman Sachs vede 65 miliardi di vendite». It has been translated and adapted for an international audience by the Money.it International desk.