Source: Wall Street See
In terms of hedge funds, financial stocks have been overweighted for the first time since 2010. In terms of mutual funds, finance and industry have become the most overweighted sectors. Meanwhile, the weight of the "seven giants" in hedge fund long-term investment portfolios in the US stock market has declined for the first time since early 2022.
In the recent period, US stocks have returned to rotation. The Dow Jones Industrial Average reached a new all-time high yesterday, while the Nasdaq was dragged down by technology stocks. Against the backdrop of volatile markets, global hedge funds and mutual funds reduced their holdings of technology and consumer stocks in the second quarter, while increasing their holdings of financial, industrial, and healthcare stocks. In addition, hedge funds have shown characteristics such as most sectors beating the bears, leverage reduction, high concentration within investment portfolios, and continued popularity of large-cap stocks.
Goldman Sachs' portfolio strategy research team has published two of their most popular research reports, HF Trend Monitor and Mutual Fundamentals. In the reports, Goldman Sachs points out the similarities and differences in industry and individual stock holdings between hedge funds and mutual funds.
Goldman Sachs trader John Flood pointed out that throughout the second quarter, hedge funds diversified their cyclical exposure, increased their positions in financial and industrial stocks, and reduced their positions in consumer stocks. Hedge funds have overweighted financial stocks for the first time since 2010. Among them, more than 20 funds established new positions in $Citizens Financial (CFG.US)$N/A.$Global Payments (GPN.US)$and$Wells Fargo & Co (WFC.US)$N/A.$FactSet Research Systems (FDS.US)$Factset Research Systems entered Goldman Sachs' "new star list" last quarter and became one of the companies with the largest increase in hedge fund holdings. Among industrial stocks,$Eaton (ETN.US)$,$Paylocity (PCTY.US)$N/A.$Stericycle (SRCL.US)$Included in the 'New Star List'.
To balance the increased holdings of financial and industrial stocks, hedge funds reduced their holdings of consumer stocks and further increased their positions in the healthcare sector.
As for mutual funds, on average, financials (+147 bp) and industrials (+137 bp) became the most overweight sectors, while the underweight of the information technology sector reached 358 bp, the lowest level in the past ten years. In addition, all types of mutual funds increased their positions in the healthcare and communications services sectors, while reducing their holdings of the materials sector.
In addition, both hedge funds and mutual funds reduced their positions in large-cap tech stocks at the beginning of the third quarter. This move proved to be wise as tech stocks subsequently experienced multiple significant declines.
Specifically, hedge funds and mutual funds reduced.$Microsoft (MSFT.US)$,$NVIDIA (NVDA.US)$and$Alphabet-A (GOOGL.US)$Please use your Futubull account to access the feature.$Meta Platforms (META.US)$N/A.$Tesla (TSLA.US)$$Workday(WDAY.US)$
However, while Berkshire Hathaway significantly reduced its stake in Apple (APPL), hedge funds and mutual funds have been increasing their holdings of Apple, taking advantage of the opportunity presented by Apple's poor performance at the beginning of the year (down 8% as of April) to increase their positions at more attractive stock prices.
It is worth noting that since 2022, the weight of Mag 7 in hedge fund long portfolios has decreased for the first time, and the proportion in mutual funds has also become lower, dropping from -660 bp in the first quarter to -671 bp in the second quarter.
、 $Fiserv (FI.US)$,$Progressive (PGR.US)$,$Visa (V.US)$,$MasterCard (MA.US)$,$Uber Technologies (UBER.US)$,$UnitedHealth (UNH.US)$and$Workday (WDAY.US)$$Chevron (CVX.US)$and$Intel (INTC.US)$Please use your Futubull account to access the feature.$Moderna (MRNA.US)$Please use your Futubull account to access the feature.$Tesla (TSLA.US)$.
In addition to the above, Goldman Sachs also highlighted some characteristics of global hedge fund holdings in Q2.
Most sectors have seen long positions outperform short positions.
Despite recent market volatility, long-short hedge funds in the US have achieved a steady return of 9% since the beginning of the year. Popular hedge funds' long positions have performed strongly, providing support for fund returns.
Hedge funds have lowered their leverage, indicating a lack of interest in short positions in the market.
Hedge funds reduced net leverage and total leverage in July, but the overall risk exposure still remains higher than the average level of the past five years. In line with historical patterns, net leverage decreased during recent market pullbacks, but later rebounded along with stock prices.
The market's short interest in median stocks of the S&P 500 index remains low, accounting for only 1.8% of the outstanding shares. Except for essential consumer goods and utilities, the market's short interest in all industries is below the 30-year average level.
There is a high concentration within the investment portfolio, with large cap stocks still popular.
In the second quarter of 2024, the concentration within the hedge fund investment portfolio and the concentration across fund portfolios remain at extremely high levels. The concentration within hedge fund investment portfolios has increased, while the concentration across fund portfolios has slightly decreased. A typical hedge fund concentrates 72% of its long positions in the top ten holdings.
In the second quarter, the turnover rate of portfolio positions decreased. On average, hedge funds changed 23% of their individual stock positions and 11% of the top quartile positions.
Despite recent sales of large cap stocks, mega cap stocks are still hedge funds' most popular long-term holdings. This quarter, apart from Tesla, the top six spots on the VIP list of US stocks are still dominated by the 'Big Seven'.
The VIP list consists of 50 stocks, which most frequently appear in hedge funds' top 10 holdings. Since 2001, this combination has outperformed the S&P 500 index in 59% of quarters, with an average quarterly excess return of 43 basis points.
Editor / jayden