Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Hedge and Mutual Funds are Buying Growth Stocks Again - Goldman Sachs

Published 08/29/2022, 07:37 AM
Updated 08/29/2022, 07:48 AM
© Reuters.  Mutual and Hedge Funds are Buying Growth Stocks Again - Goldman Sachs

By Senad Karaahmetovic

Hedge and mutual funds are rotating into Growth from Value with the exposure to Info Tech and Consumer Discretionary increased, notes Goldman Sachs top U.S. equity strategist, David Kostin.

Goldman Sachs strategists analyzed equity holdings of hedge and mutual funds as of the start of 3Q 2022. The results show that mutual funds enhanced their weight in the GS’ sector-neutral long/short Growth factor by 422 bp, which marks the largest quarterly increase since at least 2013, Kostin explained.

Moreover, the data shows mutual funds are “more overweight Growth than any time since mid-2018.”

“Mutual funds moved 66 bp away from Value, but still rank in the 79th percentile vs. the past 10 years. Hedge funds added 74 bp of exposure to Growth and cut length in Value by 30 bp. However, hedge funds are still less tilted to Growth than usual (508 bp vs. 728 bp average),” Kostin added in a client note.

Similarly, the analysis of hedge fund long portfolios shows that the weight of growth stocks with low or no profitability rose from 3.5% to 3.8%.

“In contrast, the weight of growth stocks with high profit margins continued to decline for the 3rd straight quarter. The rotation back into Growth and lower quality stocks has been a tailwind for returns in 2H 2022.”

Specifically, funds are adding to their exposure to Info Tech and Consumer Discretionary, with sub-sectors like Autos, Tech Hardware, Semiconductors, and e-Commerce also benefiting from inflows.

“Mutual funds added exposure to each of the big 7 tech stocks (AAPL, AMZN, GOOGL, MSFT, NVDA, TSLA) except for META, while AAPL, AMZN, NVDA, and TSLA contributed to increased hedge fund length in Info Tech and Consumer Discretionary,” Kostin further explained.

Finally, the strategist named the 12 “shared favorites” among hedge funds and mutual funds this quarter: Centene (NYSE:CNC), Danaher (NYSE:DHR), Elevance (NYSE:ELV), Fiserv (NASDAQ:FISV), Humana (NYSE:HUM), Mastercard (NYSE:MA), ServiceNow (NYSE:NOW), Charles Schwab (NYSE:SCHW), Uber (NYSE:UBER), UnitedHealth (NYSE:UNH), Visa (NYSE:V), and Wells Fargo (NYSE:WFC).


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.