Goldman Sachs reports hedge fund trade rebounds after 2024 blowup
The trade that gave hedge fund managers collective heartburn in 2024 is back from the dead. Goldman Sachs reports that active-extension strategies, the 130/30 trades sometimes called “hedge fund-lite,” have staged a full recovery after a bruising stretch of underperformance and investor flight last year.
Assets in these strategies have climbed back to roughly $153 billion as of early 2026, according to Goldman Sachs data. That’s a significant turnaround for a corner of the market that saw painful outflows when volatility and rising interest rates made 2024 feel like a stress test nobody signed up for.
What exactly is a 130/30 trade
Think of it as traditional long-only investing with a twist. A 130/30 strategy goes 130% long on stocks the manager likes and 30% short on stocks they don’t. The net exposure stays at 100%, just like a regular fund, but the manager gets to express conviction on both sides of the ledger.
These strategies became popular precisely because they offered a middle ground. Institutional investors who couldn’t stomach the fee structures and lockup periods of full-blown hedge funds could still access some of that short-selling alpha. When markets cooperate, it works beautifully. When they don’t, the leverage bites.
What went wrong in 2024, and what went right after
The 2024 drawdown wasn’t the result of a single spectacular implosion. Market volatility and a rising rate environment created headwinds across the hedge fund universe, squeezing returns and spooking investors into pulling capital. Active-extension strategies took a disproportionate hit because their modest leverage amplified losses at exactly the wrong time.
The broader hedge fund industry, however, managed to right the ship faster than many expected. Goldman Sachs Prime Services data shows that hedge funds as a group posted average returns of 11.9% in 2024 and followed that up with 11.8% in 2025. Those are solid double-digit numbers, and they handily beat the returns most investors would have gotten from a traditional 60/40 stock-and-bond portfolio over the same period.
By the end of 2024, active-extension strategies had consolidated their dominance within their niche, accounting for 85% of total global active-extension assets according to Goldman Sachs. As markets stabilized heading into 2025, investor confidence returned. Inflows picked up, and the $153 billion figure represents not just a recovery but something closer to vindication for managers who held their ground during the rough patch.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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