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Only a third of funds are beating benchmarks, strategists say
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Funds underweight the seven stocks driving Wall Street gains
A reluctance by US mutual funds to invest in big tech stocks, which have staged a ferocious rally this year, is costing them dearly as they’re underperforming broader indexes, according to Goldman Sachs Group Inc. strategists.
Just a third of large-cap mutual funds are beating their benchmarks this year, compared with the long-term average of 38%, Goldman strategists led by Cormac Conners wrote in a note.
The average fund is 15 percentage points underweight Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia Corp., Tesla Inc. and Meta Platforms Inc., according to Goldman. Those stocks have been the biggest gainers in terms of index points in the S&P 500 in 2023.
The recovery in US equities this year has been led by a small group of tech giants as investors shifted toward companies with strong earnings potential and exposure to artificial intelligence, and away from economically sensitive cyclical industries. The Nasdaq 100 Index is up 24% and set for its best start to a year since 1998. It’s a sharp contras