July Selloff Hits Funds That Shined in the First Half
July was a rough month for some of the biggest names in hedge funds, and you probably didn't hear about it.
The trouble started with a sharp selloff in AI stocks, followed by a quick rebound. That whiplash caught several top funds off guard, including Chris Rokos's firm and Brevan Howard, both of which posted losses for the month.
The AI stock selloff that hit in July ended what had been the hedge fund industry's best first half in five years. For a while, things were going great. Then the market turned, and some of the smartest money in the business got caught on the wrong side.
The July losses stood out because the first half had been so strong. Rokos was still up 8.1% for the year, but the two-month slide showed how much of that cushion had disappeared. The swing was a reminder that momentum can reverse as quickly as it builds. Not a disaster, but a clear step back from where it had been.
The pain spread beyond the big names. Said Haidar's Jupiter fund is estimated to have lost 3.2% in July, putting it down an estimated 13% for the year. That is a serious hole, and it shows how quickly momentum can reverse.
Not everyone struggled. The firm's Composite fund rose 0.4% in July, bringing its return for the first seven months to 13.9%. So while some funds were nursing losses, others were quietly putting up strong numbers.
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What Shook the Market
The trigger for all this turbulence was a sudden shift in how investors think about AI. Nvidia disclosed new AI deals worth over $750 billion, which sounds like great news. But it also raised a big question: can the tech sector really keep spending that kind of money forever?
At the same time, a surprise breakthrough by a Chinese startup showed that China's AI labs are catching up to the US. That rattled investors who had assumed American companies would dominate AI for years to come.
The result was a sharp selloff in AI stocks, followed by a rebound. For hedge funds that had bet heavily on the tech trade, the timing was brutal.
The most dramatic casualty was the AI-focused fund Situational Awareness. It lost 67% in July, and later sold most of its public stock holdings to Ken Griffin's Citadel to meet margin calls. When a fund loses that much that fast, it often has no choice but to sell.
What This Means for Your Portfolio
Here is the thing about macro hedge funds: they are supposed to be the steady hands. These firms traditionally focus on interest rates and currencies, not the latest tech trend. But stocks now play a much bigger role at many of these funds, and that shift left them exposed when AI stocks went into freefall.
Brevan Howard's equity trading goes back more than two decades. Recently, the firm doubled down on those bets by building an equity-sector specialist team led by strategist Abhijit Chakrabortti. That strategy did not help in July.
The takeaway: If some of the most sophisticated investors in the world can get caught off guard by a sudden shift in AI sentiment, it is worth paying attention to how much of your own portfolio is tied to that same trade. The AI boom is real, but the road will not be a straight line.
The funds' representatives declined to comment, which is standard practice. But the numbers tell the story on their own.
For everyday investors, the lesson from July is not about hedge funds. It is about how quickly sentiment can flip in a market that has become obsessed with one story. When everyone is betting on the same thing, the exits can get crowded fast. As of August 19, 2026, the dust is still settling.
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