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Matthias Knab, Opalesque:

Hedge funds recorded their first monthly loss since March in July, as a sharp reversal in technology and AI-linked equities overwhelmed gains elsewhere in the industry.

The HFRI Fund Weighted Composite Index fell -1.1% for the month, according to data released by HFR, with the steepest damage concentrated in Equity Hedge and Event Driven strategies. The setback interrupts a strong run: the second quarter delivered +6.4%, the best quarterly result for hedge funds since the fourth quarter of 2020. Year-to-date, the Composite remains up +6.2%.

Alongside the technology unwind, managers contended with a deteriorating outlook for a near-term resolution of the Iran military conflict, which drove oil and energy prices sharply higher during the month.

"Hedge funds navigated an extremely intense and volatile trading environment," said Kenneth J. Heinz, President of HFR, pointing to negative technology momentum as the driver behind the largest decline for Technology hedge funds since 2008.

Heinz described the second-half macro picture as mixed, shaped by evolving AI expectations, geopolitical risk, supply chain pressures, interest rate uncertainty and shifting political dynamics - conditions in which he expects the most agile and experienced managers to separate themselves from the pack.

Technology takes the hit

The HFRI Equity Hedge (Total) Index declined -1.85% in July. Within it,......................

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