Hedge Funds Boost Holdings in SPY, QQQ and VYM During Third Quarter

Several prominent hedge funds expanded their stakes in three widely traded exchange-traded funds during the third quarter of 2025, regulatory filings show. The SPDR S&P 500 ETF Trust (SPY), the Invesco QQQ Trust (QQQ) and the Vanguard High Dividend Yield ETF (VYM) all appeared among the notable additions, underscoring continued institutional interest in broad-based U.S. equity exposure despite recent market volatility.

SPY Remains a Core Holding
SPY, which tracks the benchmark S&P 500 Index and holds roughly 500 large-capitalization U.S. stocks, drew the largest inflows from hedge funds. The fund’s sector allocation remained heavily tilted toward technology at 35.35%, followed by financials at 13.07% and consumer discretionary at 10.24%. Its ten largest positions—led by Nvidia, Apple, Microsoft, Amazon, Meta Platforms and Tesla—made up 46% of total assets. SPY carried an expense ratio of 0.09% and a dividend yield of 1.04%.

The ETF gained 14% from the start of 2025 through the end of the third quarter and advanced 89% over the preceding five-year period. One-year cumulative return stood at 21.37%, while the three-year figure reached 22.51%. On an annualized basis, SPY’s long-term average return hovered near 10%.

Managers Add to SPY Positions
Among individual managers, Tudor Investment Corp. lifted its SPY allocation by 4.13% during the quarter. Farallon Capital Management, headed by Tom Steyer, expanded its position by 9.27%. Point72 Asset Management, run by Steven Cohen, increased its stake by 3.3%, bringing the fund to 5.89% of total firm assets. The combined activity highlighted a broad consensus that the fund remains a convenient vehicle for expressing views on large-cap U.S. equities without assuming single-stock risk.

QQQ Draws Tech-Focused Interest
The Invesco QQQ Trust, which mirrors the Nasdaq-100 Index, was another beneficiary of hedge-fund buying. QQQ holds 100 non-financial companies, with technology accounting for approximately 64% of its portfolio. Consumer discretionary names represented 18.29%, and healthcare positions made up 4.21%. The ETF posted an 18% year-to-date gain through late September and has delivered a cumulative ten-year return of roughly 500%.

Managers seeking amplified exposure to high-growth sectors looked to QQQ for concentrated positions in leading technology firms. Filings indicated net purchases, though individual percentage changes were not disclosed. The activity suggested appetite for sector leadership even as markets contended with higher interest rates and shifting economic expectations.

VYM Sees Defensive Allocations
Hedge funds also reported new or expanded positions in the Vanguard High Dividend Yield ETF. VYM, which tracks the FTSE High Dividend Yield Index, did not disclose sector-level breakdowns within the filings, but its inclusion pointed to an interest in cash-flow-oriented equities that may provide ballast during periods of uncertainty. While aggregate purchase volumes were smaller than those for SPY and QQQ, the moves signaled a tilt toward diversification across growth and income strategies.

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Broader Context
Quarterly Form 13F disclosures filed with the U.S. Securities and Exchange Commission detail institutional portfolio changes and offer a window into prevailing themes among professional investors. The latest data showed that multi-strategy managers continued to adjust risk exposures in response to fluctuating macroeconomic indicators while relying on highly liquid ETFs to implement tactical shifts quickly.

Market participants noted that rising Treasury yields, divergent economic forecasts and a condensed timeframe for monetary-policy decisions contributed to more frequent portfolio rebalancing. Against that backdrop, broad index and sector-specific ETFs allowed hedge funds to modify beta, hedge single-stock concentrations and manage sector weightings without extensive trading in individual equities.

Implications for Other Investors
While hedge-fund activity can highlight prevailing institutional preferences, financial advisers generally caution retail investors against mirroring these trades in isolation. Portfolio objectives, risk tolerance and tax considerations differ substantially across investor types. Nonetheless, the third-quarter numbers suggest that seasoned managers continue to view SPY as a core market proxy, QQQ as a way to capture technology leadership and VYM as a source of potential income and diversification.

As the fourth quarter progresses, updated positioning will be tracked closely for signs of sustained conviction or tactical reversal, particularly if economic data or central-bank commentary shifts expectations for growth, inflation or interest rates.

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