Goldman Sachs says mutual funds and hedge funds are finding rare common ground among a small group of stocks that have achieved industry-wide consensus. The Wall Street firm analyzed $8 trillion in equity positions as of the beginning of the fourth quarter, based on regulatory filings. Goldman identified six of both groups’ top holdings this quarter: CRH, Mastercard, Spotify, Talen, Visa and Vertiv. These “shared favorites” are components of both Goldman’s “Hedge Fund VIP” list and “Mutual Fund Overweight Basket.” Despite recent market volatility, these are evident across long-only and hedge fund portfolios. Goldman said the group’s year-to-date performance has collectively outperformed the S&P 500 index by 10 basis points, but stocks have lagged in recent drawdowns. The overlap in positions is noticeable because the two types of investors in each sector are not perfectly aligned. Mutual funds and hedge funds both have a focus on healthcare and industrials, but they diverge in other areas. Investment trusts are overweight financial assets, but hedge funds are underweight, and while mutual funds are withdrawing, hedge funds are overweight consumer financial assets. Meanwhile, Goldman notes that the “Magnificent 7” stocks remain deeply embedded in hedge fund portfolios, with all seven stocks except Tesla included on hedge funds’ VIP lists. But those same stocks are all part of the mutual fund’s underweight basket, highlighting the long-only manager’s far more sober attitude toward mega-cap tech trading.
