The move came "as widely-owned growth stocks face skepticism about the sustainability of high growth rates," David Kostin, Goldman's chief U.S. equity strategist, said in a note.

Managers rotated out of both information technology and its new related sector, communication services, as the fourth quarter began in October, according to a Goldman Sachs analysis. The funds in Goldman's coverage universe slightly lowered their infotech underweight and made communication services, which features such industry luminaries as Facebook , Netflix and Alphabet , its biggest underweight.

Hedge funds bailed on tech stocks just in time, getting out of the battered sector and into a more defensive stance just as the market started its fourth-quarter slide.

However, Goldman recommends investors bet against hedge funds and overweight infotech, particularly the software and services subsector, "given their idiosyncratic growth profiles and low macro sensitivity, high profit margins, and reasonable valuations versus history."

So far, though, the bet against tech has worked for hedge fund managers.

Information technology was down nearly 9 percent during the fourth quarter heading into Monday trading, while communication services was off nearly 7 percent.

While getting out of the tech names, hedge fund managers rotated into health care, which is around flat for the quarter, and utilities, which is one of only three S&P 500 sectors trading in positive territory for the period, up around 5.5 percent. Hedge funds also are holding their second-biggest underweight in financials, which are down only about 2 percent and faring better than the 4.5 percent decline in the S&P 500 since October began.

Goldman agrees with the overweight position that hedges have on utilities. It's the first time the industry has taken that outlook on the classic defensive sector since the financial crisis in 2008, according to Goldman.

Overall, hedge fund returns fell into negative territory for the year after a volatile October.

"Declining leverage has exacerbated the recent underperformance of popular fund positions," Kostin wrote.

Both hedge funds and mutual funds continue to hold substantial positions in big tech names, despite the drop in overall exposure. Five of the nine most-held stocks by active managers are in the software and services industry.