Regular readers are all too familiar with my opinion of hedge funds and active management in general: Paying someone to gamble your money on a fool’s errand is a profoundly silly proposition.

I say that knowing full well that my audience is comprised in no small part of money managers and the good folks on Wall Street who service their prime brokerage needs, among other “God’s work.”

I’d apologize, but I’m not sorry. The fact is, anyone with a college education and a willingness to read a Jack Bogle book (or two) can successfully manage their own money. You don’t need an actively-managed anything, and if you have any sense about you at all, you’ll stay as far away from hedge funds as you possibly can. And even further away from the people who run them.

With that out of the way, Goldman published their latest hedge fund and mutual fund monitor last week. I forgot to mention it because… well, mostly because I don’t give a sh–t, but also because there were a lot other things going on. For example, America’s last (and maybe next) president became a convicted felon.

All derisive humor aside (and I do hope some of the above elicited a chuckle or two), there were a few notable highlights from Goldman’s quarterly compendium, which the bank’s David Kostin editorialized around and otherwise expanded on with the help of data from Goldman’s prime desk.

The figure on the left, below, shows that net leverage is up meaningfully in 2024 and now sits in the 92%ile over the past year (even as we’re obviously nowhere close to the exposure peaks witnessed during the go-go days of 2021). The same chart also shows mutual funds’ cash position is the lowest on record.

The figure on the right gives you a sense of Magnificent 7 representation in large-cap mutual funds and hedge fund equity portfolios relative to the Russell 3000.

“At the stock level, hedge funds added to AAPL but trimmed positions on net in GOOGL, AMZN, NVDA, MSFT, and META in Q1,” Goldman noted. Mutual funds cut their positions in all Magnificent 7 stocks. As Kostin reminded investors, mutual fund Underweights in the market leadership “are largely attributable to the stocks’ large weights in benchmark indices and mutual fund diversification requirements.”

As you might’ve heard, Utilities are seen as an AI trade now, and that idea’s occurred to both hedge funds and mutual funds. “A large amount of power is required to run and train AI models, and many portfolio managers view Utilities as a clear expression of the AI power theme,” Kostin remarked.

As the figure shows, both hedge funds and mutual funds increased their exposures to Utilities to new highs this year. Hedge funds were (past tense) 76bps Underweight the sector. Now they’re 75bps Overweight.

At the single-stock level, hedge funds and mutual funds exhibited a shared affinity for DHR, FI, KKR, MA, UBER, V and VRT. If you’re curious as to whether “shared favorites,” as Goldman calls them, have outperformed historically, the answer’s not really. Technically, “shared favorites” tracked by Goldman outperformed the broad market 64% of the time looking back a decade, but how meaningful is that? (“60% of the time, it works every time.”)

Other highlights included some agreement between hedge funds and mutual funds on Health Care and Info Tech as well as a shared pro-cyclical tilt.

Oh, and if you’re curious as to what kind of performance you’re missing out on by not having access to “all the best people,” as Donald Trump might put it, Goldman’s prime desk estimates US equity fundamental long/short hedge funds have returned +7% YTD, just 350bps (plus fees) behind the S&P, which you can track for — checks notes — three basis points at Vanguard. As for mutual funds, 42% of large-cap funds are outperforming their benchmarks YTD. Golf clap.

The updated Goldman hedge fund VIP list is below.