Institutional investors were bullish on technology and financials during the fourth quarter of 2024 as these sectors saw major inflows, according to 13F filings with the Securities Exchange Commission (SEC). Investors were seen pulling back from the healthcare sector.
What Happened: 13F filings are mandatory reports filed by the managers overseeing at least $100 million in assets filed with the SEC. Adam Turnquist, the chief technical strategist at LPL Financial analyses the big rotation in the holdings of such funds for the fourth quarter.
Tech’s Resurgence and Financial Gains
The results of the U.S. presidential elections, hopes for deregulation, and the possibility of increased lending activity in the wake of Fed rate cuts led the investors to bump their stakes in technology and financials in the fourth quarter according to Turnquist.
After a slight dip in the third quarter, tech holdings surged by 0.7%, reflecting confidence in the sector’s growth potential. Rotation into financials increased by 0.6%.
“Communication services and consumer discretionary allocations both increased 0.5% from the third quarter, while allocations toward exchange-traded funds rose 0.4%,” according to LPL Financial’s note.
Healthcare Under Pressure
On the other hand, healthcare experienced a sharp decline, with allocations dropping by 1.4%.
This retreat followed a period of stagnation and was likely influenced by political factors. Turnquist said that “The nomination of the so-called anti-vaccine Health Secretary, Robert F. Kennedy, Jr. and the potential for reduced Affordable Care Act subsidies,” was also a potential trigger.
| Sectors | Changes In Q4 |
| Technology | 0.70% |
| Financials | 0.60% |
| Communications | 0.50% |
| Consumer Discretionary | 0.50% |
| Other | 0.40% |
| Energy | -0.10% |
| Industrials | -0.20% |
| Utilities | -0.20% |
| Consumer Staples | -0.30% |
| Materials | -0.30% |
| Real Estate | -0.30% |
| Health Care | -1.40% |
Why It Matters: These filings provide a window into the strategies of major players like hedge funds, pension funds, and endowments.
LPL Research’s Strategic and Tactical Asset Allocation Committee remains neutral on equities but favors large-cap growth and domestic companies. They also maintain a neutral stance on fixed income, recommending an “up-in-quality” approach and cautioning against adding duration due to expected interest rate volatility.
Hedge Funds Latgely Follow The Trend
Hedge funds largely mirrored the broader trend, increasing their tech holdings while reducing exposure to healthcare, according to the note.
Amazon.com Inc. AMZN, Nvidia Corporation NVDA, and Tesla Inc. TSLA were among the top picks, with significant increases in market value. However, Microsoft Corp. MSFT saw a net selling of 2.1 million shares, and Palantir Technologies Inc. PLTR and PDD Holdings Inc. ADR PDD also faced substantial reductions.
While the overall trend was consistent, individual hedge fund strategies varied. While Warren Buffett‘s Berkshire Hathaway Inc. BRK BRK increased its tech exposure and added Constellation Brands Inc. STZ while reducing its stake in Bank of America Corp. BAC.
Conversely, Scion Asset Management, led by Michael Burry, favored healthcare and consumer staples, exiting positions in financials and consumer discretionary.
Bond Market Bets And ETF Insights
Beyond individual stocks, 13F filings revealed that four of the top ten purchased bond ETFs tracked the U.S. bond market. Large-cap growth ETFs also saw significant inflows, indicating a preference for these high-growth stocks, highlighted the note.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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