Quant hedge funds are off to a difficult start in 2026. The first two weeks of January produced the worst 10-day stretch for systematic long-short equity managers since October 2025.
The losses were driven not by a broad market decline, but by the unwinding of crowded trades. Lower-quality, highly shorted stocks surged, forcing funds to cover their short positions in a cascade.
UBS estimated that US-focused quant funds dropped approximately 2.8% in that period. Goldman Sachs data showed an average loss of around 1% for the worst 10-day window.
The impact was widespread among major players. Renaissance Technologies reported a loss of approximately 4%. Schonfeld’s quant strategies fell roughly 3.9%. Cubist was down around 2%. Qube, Man Group’s AHL division, Two Sigma, and Engineers Gate all faced significant headwinds.
This volatility follows a difficult 2025, where quant funds underperformed with a slow bleed from June through July. The current drawdown challenges a key selling point for systematic strategies: their low correlation to traditional equity markets.