The continued hedge fund sell-off comes amid a global market rebound, following big falls partly prompted by the unwinding of the Japanese yen carry trade at the end of July. However, Goldman Sachs analysts note that hedge funds remain cautious, with many sceptical of the current market rally and concerned about upcoming challenges, including the November US presidential election. According to the report, short sales are a significant driver of the ongoing sell-off, especially in North American stocks, with large-cap tech companies being the most heavily sold. Hedge funds are also reducing their holdings in Asian and European markets, particularly in Japan and China. In contrast, US hedge funds are shifting their focus toward sectors like energy, utilities, and real estate, favouring high-dividend equities as they adjust their portfolios.