Key Takeaways
- • Hedge fund exposure to the US healthcare sector relative to US equities hovered near a five-year high in the week before July 24, 2026, marking the second straight week of net buying, according to a Goldman Sachs note.
- • Goldman Sachs said about $283 billion of the roughly $1 trillion managed by equity hedge funds is run by healthcare specialists.
- • Specialised healthcare hedge funds returned nearly 40% between August 2025 and April 2026, versus 17% for generalist equity hedge funds over the same period.
- • A record 24% of this year's new hedge fund launches are dedicated to healthcare, the highest share since at least 2009.
- • Projected 2026 healthcare deal volumes of $173 billion would be the highest since 2019, supporting positions tied to M&A.
Summary
Hedge fund bets that healthcare stocks will rise neared a five-year high in the week ending around July 24, 2026, according to a Goldman Sachs note reported by Reuters. Goldman said hedge fund exposure to the sector relative to US equities was near its highest level in five years, the second consecutive week of increased buying. Purchases were concentrated in healthcare equipment and supplies, life sciences tools, and pharmaceuticals. The S&P 500 healthcare index was up almost 5% year to date, while European healthcare stocks were up around 2% over the same period.
Goldman attributed the momentum to several catalysts, including the use of AI in drug discovery, rising research productivity, and favourable financing conditions. In an earlier client note, the bank projected healthcare deal volumes that could benefit certain stock positions to reach $173 billion in 2026, the highest level since 2019. Smaller pharmaceutical companies being acquired have become more willing to accept higher discounts in exchange for the certainty of cash, which Trium Capital portfolio manager Felix Lo described as creating "a robust environment for deals." Lo also noted that regulatory volatility in drug approvals has increased this year.
The FDA has expedited its approval process, and last year's new drug approvals reached their highest level since 2020, according to data through the end of 2025 cited in the note.
Specialised healthcare hedge funds returned near 40% between August 2025 and April 2026, compared with 17% for generalist equity hedge funds, per Goldman's healthcare-focused report. The sector is also attracting new managers: 24% of this year's new fund launches are dedicated to healthcare, the highest share since at least 2009. Goldman estimates about $283 billion of roughly $1 trillion in equity hedge fund assets is managed by healthcare specialists.
More broadly, HFR data showed total hedge fund industry capital rose a record $409.3 billion in the second quarter to $5.6 trillion.
Goldman attributed the momentum to several catalysts, including the use of AI in drug discovery, rising research productivity, and favourable financing conditions. In an earlier client note, the bank projected healthcare deal volumes that could benefit certain stock positions to reach $173 billion in 2026, the highest level since 2019. Smaller pharmaceutical companies being acquired have become more willing to accept higher discounts in exchange for the certainty of cash, which Trium Capital portfolio manager Felix Lo described as creating "a robust environment for deals." Lo also noted that regulatory volatility in drug approvals has increased this year.
The FDA has expedited its approval process, and last year's new drug approvals reached their highest level since 2020, according to data through the end of 2025 cited in the note.
Specialised healthcare hedge funds returned near 40% between August 2025 and April 2026, compared with 17% for generalist equity hedge funds, per Goldman's healthcare-focused report. The sector is also attracting new managers: 24% of this year's new fund launches are dedicated to healthcare, the highest share since at least 2009. Goldman estimates about $283 billion of roughly $1 trillion in equity hedge fund assets is managed by healthcare specialists.
More broadly, HFR data showed total hedge fund industry capital rose a record $409.3 billion in the second quarter to $5.6 trillion.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.