--- title: "Hedge funds have encountered their \"largest drawdown\" since April of last year, particularly with \"long-short equity strategies\" that have high positions in Europe and South Korea" type: "News" locale: "en" url: "https://longbridge.com/en/news/278793512.md" description: "Hedge funds are experiencing their largest drawdown since April of last year, particularly affecting long-short strategies heavily invested in European and South Korean markets. A JP Morgan report indicates that due to the escalation of the situation in the Middle East, global stock market capitalization has evaporated by trillions of dollars, with oil prices surpassing $100 per barrel. Top hedge funds such as Citadel and Millennium have lost up to $1.5 billion in a week, nearly erasing their profits for the year. Market risk aversion is rising, with stock assets being more vulnerable than bonds" datetime: "2026-03-12T00:08:44.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/278793512.md) - [en](https://longbridge.com/en/news/278793512.md) - [zh-HK](https://longbridge.com/zh-HK/news/278793512.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/278793512.md) | [繁體中文](https://longbridge.com/zh-HK/news/278793512.md) # Hedge funds have encountered their "largest drawdown" since April of last year, particularly with "long-short equity strategies" that have high positions in Europe and South Korea Hedge funds are experiencing their most severe drawdown since last year's tariff turmoil, with concentrated liquidations in crowded trades leading to significant losses for this fast-money group. According to a report released by JP Morgan strategists on Wednesday, **since the outbreak of the Middle East conflict, commodity trading advisors (CTAs) and other quantitative funds have faced the worst performance range in nearly a year. Meanwhile, long-short equity hedge funds have also recorded substantial losses due to heavy positions in European and South Korean markets and underweighting in the software sector.** Top hedge funds like Citadel, Millennium, and Point72 collectively suffered massive losses in a single week, with the worst-hit losing as much as $1.5 billion, nearly wiping out their profits for the year in just one week. The ongoing escalation of the situation in the Middle East has evaporated trillions of dollars in market value from global stock markets over the past two weeks and pushed oil prices above $100 per barrel for the first time since 2022. JP Morgan strategists believe that, from a positioning perspective, equities are currently more vulnerable than bonds. ## Multi-strategy Under Pressure, Equity Positions the Biggest Drag CTA funds typically capture market trends by tracking momentum across various futures markets. JP Morgan cited HFR data showing that systematic diversified CTA funds have lost nearly 4% since March; another index compiled by Société Générale indicates that this strategy has seen a decline of over 2% this month. Long-short equity strategies are also under significant pressure. The HFRX Equity Hedge Index, which JP Morgan uses to track the performance of long-short funds, is expected to decline by 3% this month. Data from Goldman Sachs' prime brokerage division shows that as of the week ending March 6, hedge funds increased their short positions in equity ETFs by 8.3%, indicating a continued rise in market risk aversion. Nikolaos Panigirtzoglou, leading a team of JP Morgan strategists, wrote in the report that looking ahead, equities are more vulnerable than bonds from a positioning perspective. Previously concentrated short positions in emerging market currencies have now largely been closed out. Risk Warning and Disclaimer The market carries risks, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. 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