Goldman Sachs reports hedge fund favorites outperforming market

In the United States, Goldman Sachs revealed that a selection of hedge funds' favorite stocks is outperforming the market amid significant volatility. As of May 21, 2025, the bank analyzed the holdings of 684 hedge funds, which collectively reported $3.1 trillion in gross equity positions as of the end of March. The analysis led to the creation of the 'Hedge Fund VIP basket,' a collection of 50 stocks that frequently appear in these funds' top positions. The VIP basket has shown a history of success, outperforming the S&P 500 index in 59% of the quarters since 2001. This year has been particularly tumultuous for the stock market, marked by extreme volatility. Factors contributing to this uncertainty included President Donald Trump's unexpected rollout of tariffs early in April, which briefly pushed the S&P 500 into bear market territory. However, the benchmark managed to recover those losses a few weeks later when some of the tariffs were paused. Hedge fund managers continue to favor big tech stocks, as illustrated by the consistent popularity of Amazon, Meta, Microsoft, Nvidia, and Alphabet. The tech sector holds the largest weight in the VIP basket, representing 24% of holdings. Notably, Apple's stock has underperformed this year, plummeting more than 17%, dropping to the 9th position in the list of favored stocks, down from 6th at the end of 2024. Meanwhile, new contenders in the artificial intelligence sector, Lam Research and Micron Technology, have joined this quarter's selection of hedge fund VIPs. These shifts in stock rankings and hedge fund preferences highlight the evolving dynamics within the market, particularly as the technology sector faces scrutiny amidst changing economic conditions. In conclusion, the data highlights a persistent trend that hedge funds are successfully navigating turbulent market conditions, particularly through their preferred stock selections. Investors may find value in following these hedge fund movements as indications of market strength and opportunities.