Summary of US Equity Strategy: Institutional 13F Positioning - 4Q25 Industry Overview - The report focuses on the US equity market, particularly the shifts in institutional investor positioning across various sectors during the fourth quarter of 2025. Key Findings Sector Shifts - **Healthcare**: Increased exposure by 1.0% among large-cap investors and 2.6% among small-cap investors, driven by strong performance in biotech [6][9] - **Communication Services**: Gained 0.4% in large caps and saw notable inflows [6][8] - **Materials**: Experienced a reduction in exposure by 1.1% in large caps and 0.6% in small caps, indicating a shift away from this sector [6][9] - **Tech Holdings**: Remained flat quarter-over-quarter, with a notable reduction from EMEA-based investors [6][8][26] Investor Behavior - **Hedge Funds**: Followed similar trends as long-only funds, increasing their positions in Healthcare while reducing exposure to Materials [6][8] - **Geographic Ownership**: US-domiciled funds account for 80% of S&P 500 ownership, with Energy being the most North America-dominated sector at 86% [26][28] Performance Metrics - The S&P 500 posted a 2.4% return in Q4, led by Healthcare (+11%) and Communication Services (+7%) [8] - Hedge funds saw diverse flows, with Consumer Discretionary and Healthcare adding the most share, while Materials and Communication Services saw reductions [8][19] Small Cap Insights - Small-cap investors increased their exposure to Healthcare and Real Estate, while reducing positions in Discretionary and Materials [9][10] - Small-cap Healthcare now represents 36% of AUM compared to 19% in the Russell 2000, indicating a significant overweight in this sector [10] Active Share Changes - The report highlights the largest active share increases and reductions among the top 100 hedge funds, indicating a focus on concentrated positions in specific sectors [28] Additional Insights - **Sector Allocation Trends**: Investors are generally overweight in Industrials and Healthcare while underweight in Technology and Discretionary sectors relative to index weights [38] - **Historical Positioning**: The underweight in Technology has increased since 2010, reflecting concerns over concentration in megacap stocks [38] Conclusion - The report indicates a clear trend of increasing investor confidence in Healthcare and Communication Services, while Materials and Technology are experiencing reduced interest. The shifts in small-cap allocations further emphasize the growing focus on biotech within the Healthcare sector.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **U.S. Equity Strategy** and **Institutional 13F Positioning** for the second quarter of 2025, highlighting shifts in sector allocations among institutional investors and hedge funds [2][4][6]. Core Insights and Arguments - **Sector Shifts**: - Investors increased exposure to **Technology** (+1.9%), **Industrials** (+0.6%), and **Communication Services** (+0.6%) in Q2 2025. - Conversely, there were reductions in **Healthcare** (-1.3%), **Financials** (-0.7%), and **Staples** (-0.7%) [3][8]. - **Small Cap Trends**: - Within small caps, **Technology** (+2.3%) and **Consumer Discretionary** (+0.9%) saw the largest gains, while **Staples** (-0.9%) and **Healthcare** (-0.8%) declined [6][9]. - **Persistent Tech Underweight**: - Hedge funds continue to underweight **Technology** relative to benchmarks, a trend ongoing since 2017, attributed to the rapid expansion of megacap tech stocks [6][10]. - **Healthcare Overweight in Small Caps**: - Hedge funds exhibit a strong overweight in small cap **Healthcare** (28% of AUM vs. 10% in Russell 2000), driven by concentrated positions in biotech names [6][10]. - **Geographic Ownership Patterns**: - U.S.-domiciled funds account for **81%** of S&P 500 ownership, with **Energy** being the most North America-dominated sector (86%) and **Real Estate** the most international (22% foreign ownership) [6][22]. Additional Important Insights - **Hedge Fund Positioning**: - The majority of 13F filers are long-only funds, with only **4%** of assets represented by hedge funds. The analysis focuses on the top 100 funds by AUM and the top 100 hedge funds by AUM [7]. - **Sector Allocations Consistency**: - Sector allocations are generally aligned with benchmark weights, except for a persistent underweight in **Technology** among hedge funds [10][15]. - **Historical Positioning Trends**: - Investors are historically overweight in **Industrials** and **Healthcare** while underweight in **Technology** and **Discretionary** relative to index weights. The underweight in **Technology** has increased since 2010 due to the sector's outperformance [36][41]. - **Largest Stock Changes**: - Notable stock changes include significant active share changes among the largest S&P 500 names, with most showing negative active share relative to their index weight [27][28]. - **Top Additions and Reductions**: - The report highlights the largest additions and reductions in hedge fund positions, with specific tickers and their respective sector changes detailed [32][34][35]. This summary encapsulates the key points from the conference call, providing insights into sector shifts, hedge fund positioning, and historical trends in the U.S. equity market.