Mutual funds are heavy on value stocks, but added reliable quality names in the second quarter, according to a new Goldman Sachs analysis. "Overweight exposures to Value and small-caps have aided performance YTD, though managers cut exposure to these factors in favor of adding low volatility, high return on capital and strong balance sheet equities," Goldman analysts led by Cormac Conners and David Kostin said in a note Monday. Goldman Sachs analyzed $3 trillion of holdings from 573 mutual funds and identified their most-overweight positions — stocks that make up a higher percentage of a portfolio relative to its benchmark. The firm said investors can use their analysis to track mutual fund preferences and identify stocks that managers believe will outperform the market. Take a look at 10 names in Goldman's mutual fund overweight positions basket: Value stocks are names that trade at prices perceived to be relatively cheap for their returns. Many value names belong to cyclical industries that tend to be tied to the economy. Goldman's list includes many cyclical stocks, such as General Motors , General Electric and Morgan Stanley . New names added to Goldman's basket in the second quarter include Target , Match Group and Allstate . Visa is the stock most overweight in mutual funds compared with its benchmark, according to Goldman. The name is overweight by 24 basis points. One basis point is equal to 0.01%. Other shares heavy in mutual funds include TJX Companies , Lowe's and UnitedHealth Group . Goldman's mutual fund overweight positions basket is up 20% as of Thursday, compared with the S & P 500's 18% gain during the same period. According to Goldman, 43% of large-cap mutual funds have outperformed their respective benchmarks in 2021. That's above the long-term average of 33% of funds beating the market. —CNBC's Michael Bloom contributed reporting.
Andrew Harrer | Bloomberg | Getty Images
Mutual funds are heavy on value stocks, but added reliable quality names in the second quarter, according to a new Goldman Sachs analysis.