GS Arruda What Matters Today HFs and MFs differ on AI but converge on Financials 24 Aug 2026

GS Arruda - What Matters Today HFs and MFs differ on AI but converge on Financials 24 Aug 2026 Thales Arruda · Goldman Sachs · FICC & Equities Mon 24 Aug 2026

1) HFs and MFs differ on AI but converge on Financials

This week we published our Hedge Fund Trend Monitor and Mutual Fundamentals reports, which analyze $10 trillion of equity positions at the start of Q3 2026. Hedge funds and mutual funds have generated solid returns this year despite the lackluster performance of the most popular holdings. 42% of large-cap mutual fund are outperforming their benchmarks YTD, above the historical average of 37%. US equity long/short hedge funds have returned +10% YTD, according to data from Goldman Sachs Prime Services. However, our Hedge Fund VIP basket (GSTHHVIP) and our Mutual Fund Overweight basket (GSTHMFOW) have each lagged the equal-weight S&P 500 as well as baskets of underweights and concentrated short positions.

Hedge funds remain more exposed to the AI trade than mutual funds. However, both groups selectively adjusted exposures to AI-related equities last quarter. Mutual funds bought shares in AMD, MU, and SNDK while hedge funds sold those stocks. BE, FLEX, and STX rank among the AI stocks bought by both hedge funds and mutual funds. Both hedge funds and mutual funds are now overweight the Financials sector for only the 3rd quarter in our historical data. Large-caps bought by both groups include COF, CPAY, FISV, and IBKR. Outside of Financials, both groups of investors also carry large overweights in Health Care but differ with regard to the consumer sectors.