Goldman Sachs Reports Major Increase in Hedge Funds’ Short Positions in U.S. ETFs as Market Rally Cools

According to a recent report by Goldman Sachs Institutional Brokerage, December marked a significant shift in hedge fund strategies, with short positions in U.S.-listed ETFs experiencing their most substantial monthly increase in nearly four years. The report details a 14.6% rise in short flows, underscoring a cautious outlook as the stock market rally loses momentum. Vincent Lin, the Co-Head of Goldman Sachs Prime Insights & Analytics, observed that while there was net buying in certain macro products, including indexes and ETFs, this trend reversed toward the end of the month, prompting increased selling activity. Notably, the segments attracting the most short interest encompassed small-cap stocks, the healthcare sector, and corporate bond ETFs. This evolving landscape reflects a strategic recalibration by hedge funds as they navigate potential market fluctuations.