Hedge Funds Shift Focus to Real Estate Stocks Amid Global Market Turmoil: Goldman Sachs Report

In a recent shift, hedge funds have abandoned global stocks and increased their bets on declining markets, according to Goldman Sachs. This move comes just ahead of U.S. President Donald Trump's announcement of tariffs that sent global markets into a downturn.

As global shares tumbled following Trump's tariff declarations on Canada, Mexico, and China, hedge funds responded by unloading stock holdings across most regions, with the exception of developed Asian markets. Goldman Sachs highlighted that this was the largest wave of stock sell-offs since August, when a market meltdown triggered by the unwinding of yen carry trades affected U.S. tech stocks.

Hedge funds were particularly aggressive in shorting industrial, consumer discretionary, energy, and communications services stocks, with industrials seeing nearly double the number of short positions compared to long positions. However, one sector bucked the trend—real estate stocks.

According to Goldman Sachs, real estate stocks were the only sector in which hedge funds increased their positions, marking the fourth consecutive week of investment in this area. Hedge funds bought real estate stocks at the fastest pace in two months, including residential, retail, and healthcare-related properties.

Experts suggest that real estate can be an attractive hedge in inflationary environments, as property values and rents tend to rise with inflation. Bruno Schneller, managing director at Erlen Capital Management, noted that higher import costs and inflationary pressures driven by trade wars could make real estate an even more appealing option for investors looking to protect against eroding purchasing power.