Hedge funds and mutual funds are generating robust returns in early 2025, with 48% of large-cap mutual funds beating their benchmarks year to date. That compares with only 29% in 2024 and the historical average of 37%.
Mag Seven lags, boosting mutual funds
According to Goldman Sachs, mutual funds have received a boost in 2025 by their underweight positioning in the Magnificent Seven. That tilt weighted on their 2023 and 2024 performances, as the Mag Seven soared. However, the group has returned only 1% in 2025 year to date, versus 6% for the S&P 493, turning that Mag Seven underweight from a headwind into a tailwind.
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