Hedge funds are once again betting on U.S. technology stocks, according to investment bank
Goldman Sachs (GS).
In this year’s second quarter, hedge funds increased their investments in U.S. tech stocks, with
conviction returning to levels last seen at the start of the COVID-19 crisis, according to Goldman
Sachs.
Specifically, hedge funds grew their investments in technology and consumer discretionary
stocks, while reducing investments in energy and materials securities during Q2, Goldman
Sachs wrote in a note to clients.
Average weightings of top 10 holdings jumped to 70% in the three months ended June 30, the
highest concentration since the first quarter of 2020. In another sign of conviction, position
turnover among hedge funds fell to a record low of 23% in Q2.
Amazon (AMZN) surpassed Microsoft (MSFT) as the most popular long position among U.S.-
based hedge funds. The funds also boosted their investments in stocks such as Nvidia (NVDA),
Apple (AAPL) and Tesla (TSLA), according to Goldman Sachs.
Hedge funds began moving money back into technology stocks in mid-June on signs that
inflation may have peaked in the U.S., leading to fewer interest rate hikes by the U.S. Federal
Reserve going forward.
Hedge funds are overweight stocks in the application software sub-sector and underweight
hardware and semiconductor stocks, said Goldman Sachs.
The investment bank analyzed the holdings of hedge funds with a combined $2.4 trillion U.S. of
equity positions. The average hedge fund in America has gained 4% since the start of July.
