How important is the tech-sector to hedge fund value added? Far more than their allocations would suggest.
Tech’s share of the S&P 500 is roughly 17%, and on the face of it, according to the Symmetric universe, hedge fund investors are only slightly overweight technology, coming in at 19%.
But the tech-sector contributes more than 27% of the total stock picking dollar value generated by hedge funds. Some 27% of all the dollars that the hedge fund industry generated picking stocks that outperform their corresponding sector come from picking tech stocks. It’s far more than the contribution from any other sector and, given the allocation, far more than you would expect.
Either hedge funds tend to be good at picking stocks in the technology industry or technology stocks may just be more conducive to the investment strategies employed by hedge funds.
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