{
  "id": 12106038,
  "title": "Hedge funds face September setback as rates, oil, and AI volatility hit returns",
  "url": "https://urgent.news/2026/10/05/hedge-funds-face-september-setback-as-rates-oil-and-ai-volatility-hit",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-05T08:24:00.000Z",
  "source": {
    "name": "Hedgeweek",
    "slug": "hedgeweek",
    "url": "https://hedgeweek.com/news/hedge-funds-face-september-setback-as-rates-oil-and-ai-volatility-hit-returns"
  },
  "original_language": "en",
  "account": "The month of September proved challenging for hedge funds, as rising bond yields, surging oil prices, and heightened volatility in AI-related stocks created a complex trading landscape, according to a Reuters report based on prime brokerage data and insights from industry investors. Among the affected strategies were fundamental equity long-short approaches, with the average fund suffering a 0.55% loss in September, according to Goldman Sachs Prime Services. Despite the difficulties, this strategy still outperformed the MSCI World Index, which saw a 1.3% decline during the same period. Systematic equity long-short funds, driven by computer algorithms, delivered a much stronger monthly return, gaining 3.46%, their best monthly performance of the year, as per Goldman Sachs data. The market's performance was significantly influenced by central bank policy, with the Federal Reserve raising interest rates for the first time since 2023 and hinting at potential further increases. Additionally, higher oil prices resulting from the Iran conflict and rising US Treasury yields, which reached levels not seen in nearly two decades, contributed to inflationary concerns. Simultaneously, worries about the sustainability of AI-related spending triggered substantial movements in heavily invested technology stocks across markets such as the US and South Korea. The volatility presented both opportunities and risks for hedge funds attempting to manage crowded positions. Goldman Sachs reported that hedge funds were net sellers across most US equity sectors in September. However, within the technology sector, trading flows diverged, with electronic equipment and hardware experiencing selling pressure while semiconductor equipment and software attracted significant buying. Asian hedge fund performance lagged behind the global average, with Morgan Stanley estimating that these funds fell 0.6% through September 25, compared to a 0.2% decline globally. This weaker performance was attributed to economic uncertainty weighing on returns. Not all strategies fared poorly; commodity and rates moves provided opportunities for managers positioned to capitalize on major market trends. Trend-following strategies were among the strongest performers in September, with the Société Générale Trend Index gaining more than 4% during the month, largely due to short positions in fixed income and long exposure to energy markets, according to Winton Group. The evolving interest-rate environment could also result in a wider performance gap between different hedge fund strategies, as managers with varying funding structures and market exposures respond differently to higher borrowing costs.",
  "summary": "Hedge funds endured a difficult September as rising bond yields, stronger oil prices and sharp swings in AI-related stocks created a challenging trading environment, according to a report by Reuters citing prime brokerage data and industry investors. Fundamental equity long-short strategies were among those under pressure, with the average fund losing 0.55% during the month, according to Goldman…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}