Hedge funds had a strong 2025, but 3 charts show lurking risks that have investors on edge

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• 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...