Hedge funds saw strong performance and inflows through November 2025. But many hedge fund strategies now show high correlation to the S&P 500 index. AI-driven stock trends and equity exposure raise risks of sharp losses in a sell-off. Hedge funds entered 2025 with momentum and optimism. After a banner year in 2024, Goldman Sachs' February outlook report found "buoyant sentiment" among investors following "unequivocally one of the best years for the hedge fund industry in recent memory." More than ...