According to a Goldman Sachs report, some hedge funds have been caught in crowded trades amid intensifying market swings in recent weeks, falling into their worst slump in about a year. Quant funds that trade along market trends using algorithms have lost a quarter of their year-to-date returns, with current year-to-date returns dropping to 10.8 percent from 14.4 percent as of June 22. Losses stemmed from short positions in US equities and developed Asian market stocks, with highly leveraged retail investors in the Korean market amplifying stock price swings. Fundamental stock pickers posted a negative return of 2.2 percent over the same period but remain up 15.5 percent year-to-date, having aggressively pulled back from AI-related trades. This massive retreat has driven hedge fund leverage to its lowest level in the past year.