Goldman Sachs: Mutual Funds Widen Tilt to Semis Over Software
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As of May 20, 2026, Goldman Sachs reports that only 29% of large-cap actively managed mutual funds are outperforming their benchmarks year-to-date, well below the historical average of 37%. The analysis covers 509 funds with $3.9 trillion in equity assets. Despite widespread underperformance, US equity funds and ETFs have seen net inflows of $166 billion year-to-date, including $95 billion into active ETFs.
During the first quarter, funds continued their pronounced rotation from software into semiconductors. Excluding mega-caps, the average fund increased its semiconductor overweight by 25 basis points to +49 bp, while expanding its software underweight (excluding Microsoft) by 12 bp to -36 bp, marking the lowest software exposure since 2012. Two semiconductor stocks ranked among the top 20 most popular additions.
Funds remain broadly underweight the Magnificent 7 by 723 basis points, with net reductions across all seven stocks, led by Alphabet (GOOGL). At the sector level, funds hold the highest overweights in Industrials (+197 bp) and Financials (+190 bp), whereas Information Technology carries the deepest underweight at -478 bp. Interestingly, year-to-date, the most overweight basket (GSTHMFOW) has underperformed the equal-weight S&P 500 by 3%, while the most underweight basket (GSTHMFUW) has outperformed by 14%. If current sector trends persist, these positioning extremes could present contrarian investment opportunities.
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