Mutual funds rebalanced away from overweight positions in large-cap bank stocks over the second quarter of 2026, according to Evercore's compilation of fund filings as of June 30. The 25 largest mutual funds by assets under management, accounting for about $3.0 trillion, held overweight positions in only two of the eight biggest bank stocks covered by Evercore at quarter end - a decline from three overweight positions in the first quarter.
Fund-level shifts were specific. The top funds increased their holdings in KKR (NYSE:KKR), Morgan Stanley (NYSE:MS), and Truist Financial (NYSE:TFC). Conversely, they reduced positions in State Street (NYSE:STT), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC). These moves resulted in a narrower set of large-cap banks carrying overweight status within the mutual fund cohort.
Alternative asset managers became a larger focus for the top mutual funds. Evercore reports the top 25 funds held overweight positions in four alternative managers - Ares Management (NYSE:ARES), KKR, Apollo Global Management (NYSE:APO), and Blue Owl Capital (NYSE:OWL). The number of funds holding positions in alternative asset managers rose to 18 in the second quarter from 16 in the first quarter.
Ownership of one large alternative manager was notably limited: only 10 of the top 25 mutual funds held Blackstone (NYSE:BX). Among mutual funds with exposure to alternative asset managers, KKR, Carlyle Group (NASDAQ:CG), and Apollo had the largest position weightings.
Across broader institutional channels, both mutual funds and hedge funds - together representing about $1.0 trillion in assets under management in Evercore's tally - were marginally underweight Evercore's financials coverage in the quarter.
Performance within Evercore's financial coverage varied. Trust banks led the group, rising 27% in the second quarter, and the overall coverage set closed the quarter up 11% on average. Evercore attributed the trust bank outperformance to stronger period-of-life results and to improved full-year outlooks reported during second-quarter earnings.
Key takeaways
- The largest mutual funds narrowed overweight exposure to major banks, holding only two of eight large-cap bank stocks overweight as of June 30.
- Alternative asset managers drew greater mutual fund interest, with overweight positions in Ares, KKR, Apollo, and Blue Owl and a rise in the number of funds owning alternatives.
- Trust banks outperformed within Evercore's coverage, rising 27% in Q2 and helping lift the coverage average by 11%.
Risks and uncertainties
- Concentration risk in a smaller set of large-cap banks - with fewer overweights, mutual funds have more concentrated directional exposure within the banking group.
- Exposure shifts toward alternative asset managers could increase sensitivity to performance and valuation moves in that sector given rising position weightings among the top funds.
- Marginal underweighting by mutual funds and hedge funds to Evercore's financial coverage indicates potential differences in sentiment that could affect relative flows and sector performance.