Mutual fund managers have been able to generate alpha outside of Big Tech this year, with some stocks contributing sizeable gains, according to Goldman Sachs. The Wall Street bank analyzed the quarter-end positioning of 528 mutual funds with a combined $2.8 trillion in equity assets. Goldman found that large-cap core have struggled this year due to their underweight in the largest tech stocks, which have led the market rally. However, mutual fund managers were able to find winners elsewhere, Goldman said. “An improving stock picking environment has helped mutual fund PMs generate alpha elsewhere in their portfolios,” Goldman strategists said in a note. “Alpha generation elsewhere in the portfolio was aided by high return dispersion, falling stock correlation and a widening of market breadth in recent months.” Alpha refers to the excess returns of a fund relative to its benchmark — on a risk-adjusted basis. The portfolio of the average large-cap mutual fund — which consists of the average positions across large-cap core, growth and value funds — has lagged the Russell 1000 by 136 basis points so far this year, Goldman said. However, excluding positions in the largest tech stocks, the average fund has generated outperformance of 67 basis points versus the Russell 1000, the firm said. The stocks that have generated the most positive alpha this year included health care names Pfizer, Johnson & Johnson and Moderna . Top gainers in mutual fund portfolios also included energy stocks Chevron , Exxon Mobil and NextEra Energy. — CNBC’s Michael Bloom contributed reporting.
