Goldman Sachs apparently knows the key to beating the market, but the bank is only telling its elite club.
The bank has created 39 portfolios exclusively for its clients, and 34 of them are outperforming the market this year while three are posting a 11 percent gain, more than doubling the S&P 500‘s year-to-date return. The three winning baskets are “high revenue growth,” “high Sharpe ratio,” and “dual beta,” according to a broad note to clients on Monday explaining the portfolios’ constructions and growth outlooks.
Goldman has been handpicking stocks based on various proprietary themes and sectors for a decade, but these portfolios are only made available for its clients to trade on the Bloomberg terminal. The bank treats the members of the baskets carefully and doesn’t always disclose all the member stocks, even in its daily and weekly notes.
Along with good track records this month, the baskets also have solid long term track records. However, the bank doesn’t suggest buying and holding the various baskets all at the same time. They recommend certain baskets at certain times based on the type of market environment.
For example, Goldman warned clients at the end of last week about companies with big revenues from China, and specifically Nvidia, days before the chipmaker released surprise disclosure on China slowdown and blew up its stock. In the note, Goldman told clients to avoid its international sales basket and recommended its domestic sales basket instead for investors wanting to hedge against international risks.