July Proves A Chilly Month For Tech-Related Hedge Funds

Editorial Staff

11 August 2026

Bloodletting in technology stocks, combined with heightened volatility, dealt tech-linked hedge funds a difficult hand in July when they sustained their largest decline since the financial crash year of 2008, new figures show.

An index of “equity hedge” strategies that use long and short positions showed a 7 per cent drop, the sharpest since January 2008, Hedge Fund Research showed in a monthly report. The measure was the HFRI EH: Technology Index. Since January, the index is up 10.2 per cent.

For hedge funds in general, this was the first monthly loss since March, Chicago-headquartered HFR said in a report. At the end of June, total hedge fund capital was $5.6 trillion, rising for the 15th consecutive quarter.

The broader HFRI Fund Weighted Composite Index® fell by 1.1 per cent in July with declines led by equity hedge and event-driven strategies. The July decline followed in the second quarter of 2026 with a return of 6.4 per cent, the highest quarter for hedge funds since the fourth quarter of 2020. So far this year, the index is up 6.2 per cent.

“Hedge funds navigated an extremely intense and volatile trading environment in July, with exposure to negative technology momentum contributing to the largest decline for technology hedge funds since 2008,” Kenneth J Heinz, president of HFR, said.

“The macroeconomic outlook for the second half of the year presents a mixed picture for broader financial markets, with investors facing an ever more complex landscape shaped by evolving AI expectations, geopolitical risk, supply chain pressures, interest rate uncertainty, and shifting political dynamics. These are conditions in which the most agile and experienced hedge fund managers are likely to differentiate themselves and lead industry gains,” he said.

Fixed income-based, interest rate-sensitive strategies posted mixed performance as bond yields rose while the Federal Reserve left rates unchanged; the HFRI Relative Value (Total) Index advanced 0.2 per cent for the month.

The HFRI Macro (Total) Index declined by 0.3 per cent in July, with gains in pure commodity strategies offset by losses in Systematic CTA (commodity trading advisor) strategies. Macro sub-strategy performance was led by the HFRI Macro: Commodity Index, which advanced 2.2 per cent.

Event-driven strategies also declined. The HFRI Event-Driven (Total) Index fell 1.77 per cent.