Hedge Funds Bet Big On S&P 500: SPY, IVV Dominate Q3 Buys

Hedge funds dialed up their exposure to the broad U.S. equity market in the third quarter, piling into S&P 500 ETFs at a scale not seen in several quarters. New 13F filings aggregated by HedgeFollow place both iShares Core S&P 500 ETF (NYSE:IVV) and  SPDR S&P 500 ETF Trust (NYSE:SPY) among the 25 most purchased positions by large hedge funds, in what appears to be a decisive tilt toward diversified market exposure rather than narrow single-stock conviction.

From Mega-Cap Mania To Index Insurance

Although the shift continues an extended run where hedge funds still load up on mega-cap tech and AI-linked names, the amount of smart money that went into IVV and SPY was at par with the big tech investments. In Q2, hedge funds had amplified their holdings in leading technology firms substantially, with Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Nvidia Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), Alphabet Inc (NASDAQ:GOOGL), Tesla Inc (NASDAQ:TSLA), and Broadcom Inc (NASDAQ:AVGO) being among the top bought stocks.

But with valuations stretched and cross-currents in rates, the funds appear to have opted for a more index-centric safety on the side. This also aligns with ETF industry data: S&P 500 ETFs collectively raked in billions in Q3 net inflows, with IVV posting strong monthly inflows (retail and institutional) across U.S. equity funds, about $30 billion, according to data compiled by ETF Database.

Some of the biggest players led from the front. Goldman Sachs Group, for example, increased its IVV allocation in Q3 by around $2 billion to add to the evidence that institutional portfolios were leaning heavily on index exposure. While single-stock favorites such as Nvidia, Amazon, and Microsoft continued to attract interest, the aggregation of ETF flows suggests managers preferred to complement their high-beta tech bets with broad-market ballast.

Caveats: What The Data Can’t Tell Us

Still, the pivot isn’t without caveats: 13F filings are backward-looking, and hedge funds may have already shifted again in early Q4. And ETF inflows reflect retail and advisory flows too, not just hedge funds. But the consistency between hedge-fund buys and ETF-market flows underlines the message that smart money isn’t retreating, it’s broadening. If the final quarter follows the same pattern, IVV and SPY could stay among the biggest beneficiaries of institutional repositioning in case the soft-landing narrative continues to firm up.

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