Hedge funds are reportedly fleeing tech stocks at the fastest rate in twelve months, pivoting to a new trade idea.
In a note to clients seen by Reuters, Goldman Sachs says hedge funds took profits on their tech positions just as the S&P 500 index hit all-time highs.
The bank says tech stocks were sold off by hedge funds in the US and Europe more than any other sector last week, and was the largest exodus from the field since July 2024.
Goldman also notes that every type of tech stock was sold, including semiconductor chip companies, software firms and IT service providers.
While tech stocks sold off, the bank says hedge funds began shifting their capital to consumer staples, or goods that consumers purchase regularly regardless of the economic climate. Goldman says the big winners included companies that sell food and beverages, and personal care products.
“US equities valuations (such as price earnings ratios) are now 30% higher than their recent decade average, while 10-year yields remain stubbornly high and volatile. The future path of equities may depend partly on a decline in long-term rates; however, we do not seem to be there yet.”
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