Hedge funds are having a banner year, with their sharp bets on stocks delivering returns that outpace the S&P 500's 24.5% surge in 2024.
According to Business Insider, Goldman Sachs' latest analysis of nearly 700 hedge funds managing £2.4 trillion ($3 trillion) in equity positions reveals a concentrated playbook: 72% of their long assets are packed into their top 10 holdings.
These elite investors are doubling down on a select group of stocks, dubbed the 'Hedge Fund VIP' list, which has soared 30% this year.
From tech giants to rising stars, here's how to tap into the smart money and add these picks to your watchlist.
The Top 20 Lists includes:
- Knight-Swift Transportation.
- Lithia Motors.
- Yum Brands.
- Sempra.
- US Bancorp.
- NiSource.
- Essential Utilities.
- SLM.
- Kinder Morgan.
- Tapestry.
- Alliant Energy.
- BlackRock.
- Zions Bancorporation.
- First American Financial.
- Floor & Decor Holdings.
- Darling Ingredients.
- Edison International.
- Wyndham Hotels & Resorts.
- Expand Energy.
- Labcorp.
Ride the Tech Wave with Confidence
Hedge funds remain heavily invested in technology, with Apple, Microsoft, and Nvidia topping Goldman's VIP list. Despite a slight shift toward mid-sized stocks, tech accounts for a hefty chunk of their portfolios, as Reuters notes that funds are still bullish on AI-driven growth.
A 21 May 2025 X post from @GVDInvestor highlights that these tech titans, alongside Meta and Alphabet, have delivered 6% gains in a volatile market, outpacing the S&P 500.
Apple, however, has seen some slippage, with funds trimming exposure due to valuation concerns.
Yet, with Salesforce and ServiceNow emerging as "Phase 3" AI plays, focused on productivity and revenue growth, hedge funds are clearly betting on tech's long-term dominance.
Diversify with Rising Stars
Beyond tech, hedge funds are chasing healthcare and communication services, sectors showing early 2025 strength. Goldman's 20 May 2025 report identifies UnitedHealth Group and Walt Disney as 'Rising Stars,' stocks seeing a surge in hedge fund interest.
CNBC reports that healthcare, up 6% year-to-date, is gaining traction for its defensive qualities amid tariff and regulatory uncertainties.
Disney's appeal lies in its streaming growth and theme park recovery, making it a standout in communication services.
These shifts reflect a broader move away from the 'Magnificent Seven' toward stocks with untapped potential, offering investors a chance to diversify while following the smart money.
Capitalise on Domestic Strength
Hedge funds are also pivoting to stocks insulated from tariffs and China exposure, favouring companies tied to domestic sales and deregulation.
Williams Companies, a natural gas processor, and Robinhood Markets made Goldman's Rising Stars list, reflecting bets on small businesses and U.S.-focused growth.
Reuters notes that funds dumped consumer discretionary stocks in April 2025, anticipating a slowdown, but increased leverage in financials and industrials.
This aligns with Goldman's forecast of above-trend U.S. economic growth, driven by potential tax cuts and a strong dollar, as outlined in a 5 January 2025 TheStreet report.
Stocks like JPMorgan Chase, added to the VIP list, signal confidence in a robust domestic market.
Hedge Funds' Winning Edge
The smart money is speaking loud and clear: concentrated bets on proven winners and emerging stars are paying off.
Goldman's VIP list, blending tech stalwarts with healthcare and domestic-focused picks, offers a roadmap for investors navigating 2025's uncertainties. While tariffs and a cooling housing market pose risks, hedge funds' 30% returns show they're ahead of the curve.
By adding these 20 favourites to your watchlist, you're not just following Wall Street, you're positioning for success. But stay sharp, market volatility demands vigilance.
Originally published on IBTimes UK
