GOLDMAN SACHS: Hedge funds and mutual funds have very different views on the financials

It's no secret that bank stocks have outperformed the broader stock market since the election.

Yet the enthusiasm for financials may be limited only to a certain kind of investors, according to a Goldman Sachs research note from chief US equity strategist at Goldman Sachs David Kostin's team.

"Since the election, Financials have rallied by 25% led by a 33% surge in Banks, outpacing the 12% rise in the S&P 500," the team noted.

However, among major institutional investors, mutual funds have backed the sector more than hedge funds. In fact, Goldman notes, "mutual funds and hedge funds hold opposing views on Financials"

Talking about exposure to financials, the team noted, "hedge funds have a low 11% net exposure to Financials while large-cap core and growth mutual funds overweight the sector."

Highlighting a potential risk behind the rally in financials, Kostin's team says, "a delay in tax cuts until 2018 will postpone the accretive earnings impact incorporated into many current year EPS forecasts."

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