Mutual funds and hedge funds often think alike regarding potential investments, but not always. The highly diverging opinions between hedge funds and mutual funds on the energy sector today is an excellent case in point.
The Goldman Sachs Portfolio Strategy Research US Weekly Kickstart published on February 28th offers a comparison of the performance of mutual funds and hedge funds so far in 2015. GS analyst David J. Kostin and colleagues point out that while the typical hedge fund is up 1.5% so far in 2015, 46% of mutual funds are beating the S&P 500 year to date. They also highlight 11 stocks that are popular holdings among both hedge funds and mutual funds.
Consumer discretionary favorite sector to date in 2015
The consumer discretionary sector remains hot among all types of funds. The average hedge fund currently has a 20% net weighting in the sector and mutual funds also continue to overweight the sector. In fact, large cap core mutual funds have upped their overweight holdings in the sector to 113 basis points, and large cap, value and small cap funds are also currently significantly overweight consumer discretionary.
Diverging opinions on the energy sector and health sector
Kostin et al. note that the energy sector is one area where mutual funds and hedge funds clearly diverge. Hedge funds continue to pile into energy firms of various sorts, while mutual funds increased their underweights on the sector.
Also of note, hedge funds have begun moving into the health care sector lately, while mutual funds are starting to cut back on the sector.
11 favorite stocks of both hedge funds and mutual funds in 2015
The GS report also filters out the 11 stocks that appear the most frequently in both hedge fund and mutual fund portfolios. Pharma firm Actavis is one of the firms on the list, having been actively involved in M&A activities for some time now. Mega insurance firm AIG is another popular holding among funds of all types. Citigroup, EMC, Facebook, Google, Gilead Sciences, JPMorgan, Mastercard, Medtronic and Priceline round out the most popular 11 stocks across all funds.