A wave of liquidations hit equity-focused managers throughout the fall, leading to a total drop of about 9% in market exposure since June. The contraction culminated in October, which represented the largest active reduction in positions by stock-picking funds in more than a decade. According to data from Morgan Stanley, more than 40% of these funds ended October with flat or negative year-to-date returns, while more than half of the 46 major funds tracked by Bloomberg finished the month in the red.
The market downturn triggered personnel cuts and strategy shutdowns at several multi-strategy firms. Engineers Gate reduced its human-plus-quant equities unit to just five portfolio managers, and Samlyn exited all investment sectors except for financials. Other firms faced steeper losses, with VARA falling 33% in October and Arini liquidating more than $2B in assets in one week to meet margin call requirements.