Hedge funds lose ground as crowded tech trades hit in October

Crowded technology positions, geopolitical shocks and credit-market volatility drove losses across hedge-fund strategies in October. The selloff continued into early November, when the Nasdaq 100 fell 6.4% on Thursday, its sharpest decline since March 2020. The S&P 500 dropped 4.4%.

Balyasny Asset Management fell 3.4% in October, leaving it down 2.7% for 2026. ExodusPoint Capital Management lost 2.4%, reducing its gain for the year to 1.6%. Millennium Management declined 2.3% and ended October up 5.7% for 2026.

Millennium is withdrawing more than $1.5 billion from external managers Troluce Capital Advisors and Axebrook Capital after both firms recorded losses. Walleye Capital is returning part of its investors’ capital after its worst monthly performance since March 2020. Kirkoswald Asset Management recorded its largest monthly loss on record.

Credit-focused Arini Capital Management fell more than 12% in October. AI-focused Value Aligned Research Advisors dropped 33%. D1 Capital Partners’ equity portfolio lost 4.4%, while Whale Rock Capital Management’s flagship fund declined about 8%.

The losses followed a broad retreat from artificial-intelligence investments. Political turmoil in Brazil and France added to market pressure, while renewed concerns about credit risks increased volatility. Investors also reassessed AI spending and the possibility of regulatory intervention after a brief post-election rally.

Some large managers gained during the month. Citadel’s Wellington fund rose 1.7%, bringing its return for 2026 to 15.3%. DE Shaw’s Composite fund increased 0.7% and was up 16% for the year. Quantedge returned 7.2% in October, lifting its annual gain to 60%.

The losses increased scrutiny of correlations between hedge-fund strategies. Multimanager firms often use leveraged teams to trade across markets, and risk reductions or forced selling could spread pressure from technology stocks to other investments.