Quant hedge funds are currently facing their worst run since 2023, as losses from crowded bets in US stocks have impacted their strategies. Early January marked the weakest 10-day period for systematic long-short equity managers since October, with approximately 1% in losses, according to Goldman Sachs Group Inc. This downturn mirrors sharp drops experienced in June and July of the previous year.
The pain was largely concentrated in US equities, leading to concerns about the volatile returns in the sector. Firms like Renaissance Technologies saw their strategy decline by roughly 4% by early January, while Schonfeld’s quant operation fell by approximately 3.9% through mid-month, and Engineers Gate dropped around 6%. UBS estimated that US-focused quant funds were down about 2.8% in the first two weeks of 2026 alone.
Driving these losses were one-day deleveraging events, described by UBS as the sharpest since December 22, 2025. Crowded trades and violent reversals in factor-based positioning were frequently cited as the main reasons behind these losses. The summer of 2025 also saw quant equity managers experience their worst run since the end of 2023, with average losses of approximately 4.2%, primarily due to momentum unwinds and a rally in lower-quality stocks.
