Hedge funds increased their bullish exposure to U.S. healthcare stocks to nearly its highest level in five years, according to a Goldman Sachs NYSE:GS note. Goldman Sachs, a global investment-banking and asset-management company, said managers added exposure for a second consecutive week, purchasing shares across healthcare equipment and supplies, life-sciences tools and pharmaceutical companies. The S&P 500 (SPY) healthcare index had gained almost 5% during 2026, compared with an increase of approximately 2% for related European healthcare stocks. Hedge funds appear to be positioning for potential gains from artificial-intelligence-assisted drug discovery, active financing markets and expected corporate transactions.
Goldman estimated that healthcare deal volume could reach $173 billion during 2026, representing the highest annual level since 2019. The bank also said research productivity had improved as AI increasingly supported drug-development work. The U.S. Food and Drug Administration accelerated its review processes, while the number of new drugs approved during 2025 reached the highest annual level since 2020. However, Felix Lo, a portfolio manager at Trium Capital, an investment-management company, said regulatory volatility surrounding drug approvals had increased during 2026. He added that smaller pharmaceutical companies involved in acquisitions were more willing to accept larger valuation discounts in exchange for the certainty of receiving cash, contributing to an active environment for transactions.
Specialist healthcare hedge funds generated returns approaching 40% between August 2025 and April 2026, compared with approximately 17% for generalist equity-trading hedge funds. Goldman said 24% of new hedge funds launched during 2026 were dedicated to healthcare, the highest proportion since at least 2009. Healthcare specialists manage approximately $283 billion of the roughly $1 trillion overseen by equity hedge funds. Separate data from HFR, a hedge-fund research company, showed that total industry capital increased by a record $409.3 billion during the second quarter to $5.6 trillion. The growing concentration of capital may support healthcare valuations and transaction activity, although elevated positioning could also increase the effect of disappointing clinical, regulatory or financing developments. Investors may therefore view the sector's momentum as substantial while recognizing that higher exposure does not guarantee continued performance.