Goldman Sachs: Hedge funds accelerated their withdrawal from global equities in March, shifting funds toward defensive assets

People’s hopes for a rapid resolution to the Middle East war are gradually fading. Against the backdrop of rising risk-aversion sentiment in the market, hedge funds are accelerating their exit from global stock markets, and fund flows are showing clear shifts.

Zhengtong Finance APP learned that, according to data from Goldman Sachs’ commodities brokerage business, in March hedge funds sold global stocks at the fastest pace in 13 years, marking the second-largest scale of de-risking by the firm since it began tracking in 2011. This selloff was mainly driven by an increase in short-selling activity, reflecting a significant intensification of investors’ concerns about market prospects.

As a result, global equity markets are under pressure. The MSCI All-Country World Index fell 7.4% in March, posting the largest month-on-month decline since 2022; the S&P 500 fell 5.1% over the same period.

In terms of trading strategies, investors have largely expressed bearish views through exchange-traded funds. Data show that short-selling activity in US large-cap stock ETFs increased significantly, driving total ETF short positions up by 17%. By industry distribution, hedge funds’ de-risking in the US market shows a broad pattern: out of 11 industries, 8 recorded net outflows. The declines were particularly notable in the industrial, materials, and financial sectors—sectors that are typically more sensitive to the economic cycle.

Meanwhile, funds are clearly shifting toward defensive assets. Fund managers increased their holdings of the consumer staples sector at the fastest pace since July 2025. In addition, in the technology, media, and telecom sectors, hedge funds posted their first net purchases in four months; however, this change was driven more by short-covering than by adding new long positions.