Goldman Sachs US Weekly — Hedge Funds and Mutual Funds Split on AI, Converge on Financials
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Comparing $10tn of equity positions at the start of Q3 2026 (991 hedge funds with $5.4tn gross long; 504 large-cap active mutual funds with $4.6tn AUM), Goldman Sachs finds solid but crowded performance: 42% of large-cap mutual funds beat benchmarks (37% historical average) and equity long/short funds returned +10%, yet the most popular holdings lagged — mutual fund overweight baskets +9% and hedge fund VIP baskets +12% versus +16% for the equal-weight S&P 500, while underweight baskets rose 24% and concentrated short baskets 38%. AI is the sharpest divide: hedge funds remain heavily exposed while mutual funds are underweight AI infrastructure; in Q2 mutual funds bought AMD, MU and SNDK as hedge funds sold, with both adding BE, FLEX and STX. Financials show rare convergence — only the third simultaneous overweight on record — with hedge fund net tilt up over 300bp to the largest since pre-GFC and mutual funds at their biggest overweight since at least 2012; both bought COF, CPAY, FISV and IBKR. The six 'common favorites' (BA, COF, MA, SPCX, TMO, V) are +29% YTD. Goldman forecasts 2026 S&P 500 EPS of $340 (+24%), a year-end target of 8,000 and a 12-month analyst target of 8,300.