Goldman Sachs reports a significant rebound in active-extension, or 130/30, hedge fund-lite strategies, signalling renewed investor confidence and a shift in asset allocation preferences as these funds grow to $153 billion by early 2026.
Goldman Sachs says the hedge fund-lite trade that fell out of favour last year has staged a striking recovery, with assets in so-called active-extension, or 130/30, strategies climbing back to about $153 billion by early 2026.
The rebound marks a sharp reversal for a corner of the market that was hit hard in 2024, when volatile trading conditions and higher borrowing costs undermined returns and pushed some investors to pull money. In a 130/30 structure, managers typically run a portfolio that is 130% long and 30% short, keeping net exposure at 100% while allowing them to bet both for and against individual stocks.
According to Goldman Sachs, the strategy’s appeal lies in its middle ground between plain vanilla long-only investing and full hedge fund mandates. Institutions that do not want the fees, complexity or lock-ups of traditional hedge funds can still gain access to short-selling and more active stock selection, although the extra leverage can magnify losses when markets turn against them.
Goldman’s data suggests the broader hedge fund industry has helped restore confidence in the approach. The bank said hedge funds produced average returns of 11.9% in 2024 and 11.8% in 2025, a run of performance that has left them on stronger footing heading into this year. Goldman also said 2024 brought net inflows into hedge funds for the first time in several years, as the Federal Reserve’s rate-hiking cycle created more opportunities for active managers to outperform.
Investor sentiment appears to be improving further. Goldman has said nearly half of asset allocators expect to raise their hedge fund exposure in 2026, with particular interest in quantitative and discretionary macro strategies as investors look for returns that do not move in lockstep with equities and bonds.
By the end of 2024, active-extension funds accounted for 85% of global assets in their category, underscoring how dominant the format has become within its niche. The recovery to $153 billion suggests that, after a difficult spell, the “hedge fund-lite” trade is once again being treated less as a compromise and more as a credible institutional allocation.
- https://cryptobriefing.com/goldman-sachs-hedge-fund-trade-rebounds/ – Please view link – unable to able to access data
- https://www.goldmansachs.com/insights/articles/hedge-funds-have-momentum-after-posting-double-digit-returns-last-year – Goldman Sachs reports that hedge funds have entered 2026 with strong momentum, following a second consecutive year of double-digit returns in 2025. The firm notes that since the Federal Reserve began raising rates in 2022, hedge funds have had more opportunities to outperform their benchmarks, leading to net inflows last year for the first time in several years. Additionally, nearly half of asset allocators expect to increase their exposure to hedge funds in 2026, with the strongest interest in quantitative and discretionary macro funds, reflecting a desire for uncorrelated strategies as equities and bonds often move together.
- https://www.lambdafin.com/articles/average-hedge-fund-performance – Lambda Finance provides a comprehensive analysis of average hedge fund performance from 2023 through 2025, aggregating data from public index providers, SEC filings, and institutional reports. The report benchmarks average hedge fund performance across six strategy types, four fund-size tiers, and fee structures. It highlights that the average hedge fund returned 11.5% in 2025, compared to 23.3% for the S&P 500 and 14.1% for a 60/40 portfolio. The analysis also segments performance by strategy, manager quartile, fund size, and fee impact, offering a detailed benchmarking resource for allocators, researchers, and journalists.
- https://www.goldmansachs.com/investor-relations/financials/current/annual-reports/2024-annual-report – Goldman Sachs’ 2024 Annual Report highlights significant financial achievements, including a 16% year-over-year increase in net revenues to $53.5 billion and a 77% growth in earnings per share to $40.54. The report also notes an improvement in return on equity (ROE) by over 500 basis points to 12.7% and a reduction in the efficiency ratio by 11.5 percentage points to 63.1%. Additionally, the firm generated a total shareholder return of 52%, reflecting strong performance and strategic execution throughout the year.
- https://www.investing.com/news/stock-market-news/goldman-says-ai-trade-reversal-pressures-hedge-fund-returns-4784122 – Investing.com reports that Goldman Sachs has observed a reversal in artificial intelligence (AI) trades, which has negatively impacted hedge fund returns. Systematic managers have experienced a 3.6% decline, marking their worst drawdown since the summer of 2025. The losses are primarily attributed to short positions in U.S. equities, developed Asia, and Europe, with momentum and crowded positioning identified as the main factors. Fundamental long-short managers have fared better, slipping 2.2% since June 22, but remain up 15.5% for the year, with information technology and momentum exposure being the primary contributors to the losses.
- https://www.idnfinancials.com/news/62691/goldman-sachs-hedge-fund-performance-slumps-worst-in-4-years – IDNFinancials reports that global hedge funds experienced their worst monthly decline in over four years, as market volatility triggered by the Iran war affected equities and led to a downturn for major asset managers. Research from Goldman Sachs indicates that funds responded to the volatility by selling global equities for four consecutive months at the fastest pace in 13 years. This trend highlights the challenges faced by hedge funds in navigating geopolitical tensions and market fluctuations during the period.
- https://www.investing.com/news/economy-news/hedge-funds-deliver-doubledigit-returns-in-2024-3794328 – Investing.com reports that hedge funds achieved double-digit returns in 2024, with some of the world’s largest funds finishing the year with comfortable gains. Hedge funds in 2024 averaged a 10.7% return through November, compared to 5.7% in the same period in 2023. Notably, Light Street Capital’s long/short fund focused on technology ended 2024 up 59.4%. This performance was influenced by chaotic markets, central bank policy changes, and a tight U.S. presidential election race, contributing to the strong returns for hedge funds during the year.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article reports on Goldman Sachs’ assertion that the hedge fund-lite trade has rebounded, with assets in 130/30 strategies reaching approximately $153 billion by early 2026. This information aligns with a Bloomberg article published on January 12, 2026, titled ‘Wall Street Reboots Leverage in $153 Billion Active Stock Trades,’ which discusses the resurgence of such strategies. ([bloomberg.com](https://www.bloomberg.com/news/articles/2026-01-12/wall-street-reboots-leverage-in-153-billion-active-stock-trades?utm_source=openai)) The Bloomberg article is the earliest known publication of this narrative, indicating that the content is not recycled. However, the article’s reliance on Goldman Sachs’ data raises concerns about potential bias and the need for independent verification. Additionally, the Bloomberg article is behind a paywall, which may limit access to the full content. Given these factors, the freshness score is 8.
Quotes check
Score:
7
Notes:
The article includes direct quotes attributed to Goldman Sachs, such as statements about the appeal of 130/30 strategies and their position between long-only investing and full hedge fund mandates. These quotes are consistent with those found in the Bloomberg article. However, the Bloomberg article is behind a paywall, limiting access to the full content and making independent verification challenging. Given these factors, the quotes score is 7.
Source reliability
Score:
6
Notes:
The article cites Goldman Sachs as the primary source of information, which may introduce bias. The Bloomberg article, which also discusses the same topic, is behind a paywall, limiting access to the full content and making independent verification challenging. Given these factors, the source reliability score is 6.
Plausibility check
Score:
7
Notes:
The article’s claims about the recovery of the hedge fund-lite trade and the performance of 130/30 strategies are plausible and align with industry trends. However, the reliance on Goldman Sachs’ data without independent verification raises concerns about the accuracy of the information. Given these factors, the plausibility score is 7.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article reports on Goldman Sachs’ assertion that the hedge fund-lite trade has rebounded, with assets in 130/30 strategies reaching approximately $153 billion by early 2026. This information aligns with a Bloomberg article published on January 12, 2026, titled ‘Wall Street Reboots Leverage in $153 Billion Active Stock Trades,’ which discusses the resurgence of such strategies. ([bloomberg.com](https://www.bloomberg.com/news/articles/2026-01-12/wall-street-reboots-leverage-in-153-billion-active-stock-trades?utm_source=openai)) However, the article relies heavily on Goldman Sachs’ data and statements, with limited independent verification from other reputable sources. The Bloomberg article is behind a paywall, limiting access to the full content and making independent verification challenging. Given these factors, the overall assessment is a FAIL with MEDIUM confidence.