Goldman's basket tracking hedge funds is on track for its best return ever — Here's what's in it

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Hedge fund managers are finally thriving amid the pandemic-triggered volatility after years of muted markets and lackluster performance. Goldman Sachs' basket tracking hedge funds' favorite positions has nearly tripled the S&P 500′s return this year, on pace for its best annual excess return on record.

The so-called hedge fund "very important position" basket contains the 50 stocks that appear most often on the top 10 holdings of fundamentally-driven hedge funds, according to the firm. Goldman analyzed 814 hedge funds with $2.4 trillion of gross equity positions to compile the latest portfolio, which is based on funds' recently released third-quarter regulatory filings.

The portfolio is up 32% year to date, compared to a 11% gain for the S&P 500. This would represent the basket's strongest yearly excess return on record since 2001, according to Goldman.