A popular hedge fund style is struggling in 2026. Here's why firms like Freestone Grove and Holocene have lost money.
The stock market's gains have mostly come from a single trend, artificial intelligence, making it tough for investors focused on diversification.
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# Market Concentration Hurts Diversified Funds in 2026 Hedge funds emphasizing diversification, including Freestone Grove and Holocene, have posted losses in 2026 as artificial intelligence stocks have driven nearly all market gains, leaving their spread-based investment strategies underperforming. The AI-driven market concentration has created a challenging environment for multi-strategy funds that rely on gains across various sectors and trends rather than concentrated bets on single dominant themes.
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