Goldman Sachs’ list of "stocks that matter most" outperforms S&P 500 year-to-date

Investing.com - Goldman Sachs’ list of stocks that "matter most" to hedge funds has outperformed the benchmark S&P 500 so far this year, according to analysts at the investment bank.

In a note to clients on Thursday monitoring 695 hedge funds, the strategists led by Ben Snider said their basket of "Hedge Fund Very Important Positions" had returned 10% so far this year, outpacing the 4% logged by the S&P 500.

On Goldman Sachs’ so-called "VIP" list, which contains the 50 stocks that appear most often among the top 10 holdings of "fundamentally-driven" hedge funds, six members of the "Magnificent 7" group of mega-cap tech firms have the highest amount of popularity: Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL), and Apple (NASDAQ:AAPL).

Of these, Amazon appeared most frequently among the largest 10 holdings of hedge funds, the analysts said. As of December 31, there were 120 hedge funds with the stock as a top-10 holding, followed by Meta and Microsoft with 80 and 75, respectively.

Still, hedge funds trimmed positions on net to most of the Magnificent 7 stocks, the analysts flagged.

The VIP basket has also beaten returns from the S&P 500 in 60% of quarters since 2001, with an average quarterly excess return of 52 basis points, the analysts noted. Thirteen new stocks ascended to it in the fourth quarter, including Delta Air Lines (NYSE:DAL), Pfizer (NYSE:PFE), Reddit and Workday (NASDAQ:WDAY).

Arthur J Gallagher and Capital One Financial (NYSE:COF) were also added to the VIP list, despite many hedge funds rotating away from financial services following a post-election spike in the sector, the analysts said.

The list’s solid returns come as the S&P 500 has hovered around all-time highs in recent months, buoyed in part by hopes that the new Trump administration will usher in an era of looser regulations and lower taxes.