Data compiled by the Goldman Sachs Prime Trading Desk showed an 8.3% increase in short positions on U.S.-listed exchange traded funds in the week ending March 5. That gain is the largest weekly rise since Liberation Day and ranks as the second-largest weekly increase over the past five years.
The Goldman Sachs team, which included Vincent Lin and Marco Laicini, interpreted the move as a clear pickup in hedging activity across ETF strategies. Among the ETF categories drawing the most short interest during the week were corporate bond ETFs, energy ETFs, small-cap equity ETFs and large-cap equity ETFs.
Flow patterns in the underlying market were mixed. U.S. equities overall were net sold for the third consecutive week, a trend driven primarily by a combination of short and long sales in macro products. Those sales were partly offset by long purchases and short covers in individual stocks, leaving single stocks collectively net bought even as broader equity flows were negative.
Sector-level activity was uneven. Despite the net buying of single stocks in aggregate, seven of 11 sectors were net sold during the week. The report attributes that distribution to ongoing disposals across cyclical sectors and a widespread de-grossing within TMT names, with notable short covering occurring in software stocks.
Market context and interpretation
The data point to elevated defensive positioning through ETF shorts as market participants adjusted exposures. Corporate bond and energy-focused ETFs were singled out among the most shorted categories, alongside both ends of the market-cap spectrum in equities.
At the same time, flows show a bifurcated approach to risk: macro-oriented products experienced net selling on both short and long trades, while single-stock activity included both fresh long buying and some short covering, resulting in a modest net buy stance for individual equities.
Takeaway
The week through March 5 featured a noteworthy rise in ETF short positions and continued net selling in U.S. equities, with differentiated behavior across sectors and between macro products and single stocks. Market participants and risk managers may interpret these movements as an increase in hedging and rebalancing activity across asset classes.