Business Insider Goldman says hedge funds and mutual funds alike have converged on the financials sector in recent months, while views of AI have split.
- Big investors have converged on one corner of the market.
- According to Goldman Sachs, hedge funds and mutual funds have piled into financials this quarter.
- Stocks they've been snapping up include Capital One, Fiserv, and Interactive Brokers.
Investors are split on the AI trade, but they've converging on one sector of the stock market in particular in recent months: financials.
Hedge funds and mutual funds have both poured money into the sector, even as their investing moves diverge when it comes to high-flying areas like AI. In fact, both groups' buying of financial stocks rank at the highest levels in Goldman's historical data set.
"Hedge funds increased their net tilt toward Financials by over 300 bp during Q2 to the largest position in the sector since prior to the GFC," wrote the bank's chief strategist Ben Snider in a note to clients. "Mutual funds also increased their tilt to Financials last quarter and now carry their largest overweight since at least 2012."
The strong bullish tilt toward financials comes after many companies in the sector reported strong earnings in the second quarter. But when it comes to the stocks that both hedge funds and mutual funds have been buying, performances have been mixed in 2026. Snider's team shared four names that have been rising in favor among both investor groups.
Snider also named six "shared favorites" that appear both on Goldman's lists of hedge fund long positions and largest overweight positions for mutual funds. While only Capital One appears on both, the shared favorites list also includes credit cards giants Mastercard and Visa. Other non-financial names include SpaceX, Boeing, and Thermo Fisher Scientific.
"The stocks that are both hedge fund and mutual fund favorites have a track record of outperformance at the expense of higher volatility," Snider said, adding that since 2013, shared favorites have delivered an annual return of 17%.
Invetors' recent appetite for financials comes as institutional bullishness on the previously red hot AI trade is diverging, with one group staying heavily invested while another has pulled away.
"The returns of hedge funds and their most popular holdings have been closely correlated with swings in the AI trade during the last few months," Snider said. "The weight of AI infrastructure stocks in mutual fund portfolios has risen sharply this year but failed to keep pace with benchmark weights."
Some big name hedge funds are also bullish on financials. Bill Ackman recently revealed that Pershing Square increased positions last quarter in both Mastercard and Visa, as well as in New York Stock Exchange operator Intercontinental Exchange and market intelligence firm
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