Reported Active Long exposure (hedge funds) increased by $550 billion, +26%. to $2.6 trillion and Active Short exposure increased by $78 billion, +47%, to $243 billion.

Both Passive & Active investors increased both their long and short positions significantly into a rising market in 2025.

Reported Passive Long holdings of mutual funds, pension funds and ETF investors increased by $2.5 trillion in 2025.

The largest dollar increases were in the Financial (which was up +47% for the year); Industrial (which was up +31% for the year) and Consumer Discretionary (which was up +14% for the year) sectors.

While only the Energy sector (which was down -8% for the year) saw a decrease in long holdings.

Active Long investors, hedge funds, were not standing on the sidelines and added $550 million in long exposure. The Financials sector saw the largest increase, followed by the Industrials sector.

On the short side of the market, Active Shorts (predominately made up of hedge funds) boosted their exposure by $78 billion. The Financials sector saw the largest increase followed by Industrials.

Both Active & Passive investors increased their holdings looking to benefit from a market that rallied strongly after its early second quarter weakness and are holding on to that exposure hoping for a strong 2026.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.

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