Hedge funds outpace global benchmarks as May rally fuels record leverage

The S&P 500 concluded the month with its ninth consecutive weekly gain, marking its longest winning streak since December 2023. According to a Goldman Sachs note, hedge funds capitalized on this momentum by purchasing stocks at the fastest pace seen since June 2025. This buying frenzy focused heavily on information technology, consumer discretionary, financials, and industrials, while energy and communications services saw net selling.

Market participants leaned into crowded long positions, effectively amplifying returns as sustained buying pressure drove asset prices higher. While tech holdings bolstered performance for both fundamental stock pickers and systematic traders, exposure to industrial firms dampened those gains. Systematic stock funds specifically recorded a 0.84% return for the month. Major multi-strategy players also saw positive movement, with Millennium and Schonfeld reporting gains of 2.4% and 2.6% respectively. Reflecting this heightened appetite for risk, total borrowing among funds reached one of the fastest growth rates recorded by Goldman Sachs in the last half-decade.