Hedge funds have increased their investments in financial stocks in North America, Europe and Asian emerging markets, at a time when European and US banking indices are soaring, according to a report by Reuters citing a note from the Goldman Sachs Group’s prime brokerage desk. 

The report cites the note from last week in revealing that the aforementioned financial stocks were among the most sought-after stock sectors for the second week running last week. The STOXX Europe 600 banks index is at its highest since 2019 with an 8.3% rise, while the Dow Jones banking index has risen by 6.6% since the start of 2024.

Hedge funds took long positions in banks, capital markets companies and consumer finance firms, but were net short insurance companies. Hedge fund clients at the Goldman Sachs prime brokerage desk hold very few positions in financial companies relative to other global stocks, according to the report.