Hedge funds are experiencing their most severe drawdown since last year's tariff disputes, with concentrated unwinding of crowded trades causing significant losses for this fast-money sector. According to a report released by J.P. Morgan strategists on Wednesday, quantitative funds such as Commodity Trading Advisors (CTAs) have faced their worst performance period in nearly a year since the outbreak of the Middle East conflict. At the same time, equity long-short hedge funds have recorded substantial losses due to heavy exposure to European and Korean markets and underweight positions in the software sector. Top hedge funds including Citadel, Millennium, and Point72 collectively suffered massive weekly losses, with the worst-hit losing up to $1.5 billion, nearly erasing their year-to-date profits in just one week. The escalating Middle East situation has wiped trillions of dollars from global stock market capitalization over the past two weeks and pushed oil prices above $100 per barrel for the first time since 2022. J.P. Morgan strategists believe that, from a positioning perspective, equities are currently more vulnerable than bonds. Multi-strategy funds are under pressure across the board, with equity positions being the biggest drag. CTA funds typically capture market trends by tracking momentum across various futures markets. J.P. Morgan cited HFR data showing that systematic diversified CTA funds have lost nearly 4% since March, while another index compiled by Société Générale indicates that the strategy has declined by more than 2% this month. Equity long-short strategies are also under significant pressure. J.P. Morgan's HFRX Equity Hedge Index, used to track the performance of long-short funds, is expected to fall by 3% this month. Data from Goldman Sachs' prime brokerage unit shows that hedge funds increased their short positions in equity ETFs by 8.3% in the week ending March 6, indicating rising risk aversion in the market. A team led by J.P. Morgan strategist Nikolaos Panigirtzoglou wrote in the report that, looking ahead, equities appear more vulnerable than bonds from a positioning standpoint. Previously concentrated short dollar positions, mainly in emerging market currencies, now appear to be largely unwound.