Hedge Funds Boost Global Equity Holdings 20% in May, Driven by Tech Sector Surge

Hedge funds have significantly increased their global equity holdings in May, marking the fastest pace of accumulation in nearly half a year. This surge in buying activity comes as the U.S. stock market concluded its most impressive May performance in decades. The S&P 500 index rose over 6% for the month, the largest single-month gain since November 2023 and the best May performance since 1990. Similarly, the Nasdaq index surged approximately 9.6%, achieving its largest single-month increase since November 2023 and the strongest May performance since 1997.

Goldman Sachs' report indicates that hedge funds maintained a bullish stance on equities across all regions, with North America and Europe leading the gains. The technology sector was a primary focus for capital inflows, with hedge funds' net long positions reaching a five-year high. The buying was concentrated in key companies within the artificial intelligence supply chain, including semiconductor manufacturers, technology hardware producers, and electronics companies.

North American technology companies were particularly favored by hedge funds, followed closely by European tech stocks. The STOXX Europe 600 index rose over 5% in May, with hedge funds increasing their holdings in European equities for three consecutive weeks, and the pace of accumulation reaching its fastest rate in three months.

In detail, the stock markets of Spain, France, Finland, Germany, Sweden, and Denmark saw the most significant net buying, while Ireland, the Netherlands, and Switzerland experienced the largest net selling. Data shows that hedge funds increased their holdings in European sectors such as non-essential consumer goods, finance, healthcare, and communications.

Goldman Sachs noted that this round of hedge fund activity primarily involved individual stock purchases, while also establishing long positions in certain stock indices. This strategic move reflects a broader optimism in the market, driven by strong performance in key sectors and regions. The focus on technology and AI-related companies underscores the growing importance of these industries in the global economy.