Hedge Funds Increase Short Positions in US, Asia; Favor European Equities

Hedge funds increased bearish positioning in U.S. equities and emerging Asian stocks last week, while adding to long exposure in European shares. The shift extended a run of net equity shorting to five straight weeks, based on the latest market data.

The same dataset showed global equity selling at its highest level since April 2025. The selling was not limited to single names, affecting both index-linked instruments and individual stocks.

Positioning changes across regions and products

The regional split was notable: more short exposure was added in the U.S. and in emerging markets in Asia, while Europe saw increased long allocations. The information provided does not specify which European markets or benchmarks attracted the additional buying.

Flows also appeared broad-based in implementation. The reported selling pressure covered index-tracking products as well as company-specific positions, suggesting the move was not confined to a single strategy type.

Sector rotation and selective long exposure

Across sectors, hedge funds were net sellers in most areas, with selling outweighing buying in the majority of global groups. The largest increases in short interest were concentrated in consumer discretionary, technology, and financials.

By contrast, the only sectors where hedge funds remained net long were consumer staples and energy. That pattern points to a more selective approach to risk, though the data does not detail whether the longs were concentrated in specific regions or companies.

Leverage and performance snapshot

Gross leverage among hedge funds declined to 309.8% during the reporting week. A lower gross figure can indicate reduced overall exposure, but the dataset does not break down how much came from trimming longs versus covering shorts.

In performance terms, hedge fund “stock pickers” gained 0.47% over March 13 to March 19. Despite that weekly rise, they were down 3.85% for March at that point, while remaining slightly positive year-to-date with a 0.16% return.

Systematic strategies outperform, uncertainty remains

Systematic traders were reported to be ahead by more than 6% for the year, outperforming discretionary stock pickers on a year-to-date basis. The material does not provide the underlying drivers of that gap, such as factor exposure, volatility trends, or regional allocations.

For markets, the combination of heavier shorting in the U.S. and emerging Asia, alongside added European longs, highlights a divergence in perceived opportunity and risk across regions. However, without details on timing within the week, instrument mix, or the size of positions by fund type, the durability of the shift remains uncertain.