Funds overseen by Hel Ved Capital Management, E20 Capital, Valliance Asset Management and WT Asset Management reported double-digit losses for the month, after posting some of the best performances in the first half. Regional firms that bet on rising and falling stocks lost 15% in July, according to a Goldman estimate based on aggregate client positions.

Investors offloaded AI-related shares in July as doubts grew over whether massive capital spending was sustainable. South Korea memory chip maker SK Hynix Inc. dropped more than 30% in Seoul trading, while those of Japan's Kioxia Holdings Corp. lost almost half of their value. China gauges tracking smaller stocks listed domestically slumped nearly 20%.

These moves represented a sharp reversal. SK Hynix's Korean shares had quadrupled in the first half, with leveraged exchange-traded funds joining retail and institutional investors in chasing the beneficiaries of the AI boom. Kioxia jumped 759% in the same six months.

With an abundance of regional suppliers to the industry, Asia-based hedge funds had leaned heavily into the theme. Elsewhere, AI prodigy Leopold Aschenbrenner's Situational Awareness booked a 67% loss in July, forcing it to sell billions of dollars of tech investments to Ken Griffin's Citadel and ending the month with assets falling to around $10 billion, from $45 billion.

Funds with more diversified holdings fared better during the month.

Arrowpoint Investment Partners' multi-manager, multistrategy fund slipped low single digits, according to a person with knowledge of the matter. The Singapore-based firm led by former Millennium Management regional Co-Chief Executive Officer Jonathan Xiong slashed risk by about 30% between May and June, the person said.

It made the move after seeing global banks curb clients' leveraged bullish bets via swaps on the likes of SK Hynix, Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. Commodities and arbitrage strategies also helped cushion returns from stock market swings.