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The most over- and underweight positions among institutional EM equity managers
12 January 2020

When looking at eVestment Holdings Analysis data, it appears emerging markets (EM) equities have rebounded modestly YTD through Q3 2019 after a substantial draw-down in the prior year with the MSCI EM up +6.23% through September 30th, 2019. There has further been significant dispersion in EM equity returns YTD, with Europe outperforming Asia and Latin America, large caps outperforming mid and small caps, and growth outperforming value.

Below we take a look at the most overweight and underweight positions among institutional quality EM equity managers. Portfolio weights are measured on an asset-weighted basis across 218 active EM all cap equity strategies managing a total of $268.7 billion, all of whom report holdings directly to eVestment.

AIA was the most overweight position with a relative weighting of +131 bps against the MSCI EM index. HDFC came in at a close second, +126 bps against the benchmark, and was also the 5th largest position overall among EM all cap managers on an asset-weighted basis. The relative weightings in Kering, Huazhu Group, Glencore and Budweiser Brewing Co APAC were driven by a handful high-AUM strategies with sizeable positions. Less than 20 strategies held each of the four aforementioned stocks as of Q3 2019.

The top underweights list was dominated by Chinese and South Korean tech firms. Indian conglomerate Reliance Industries and South African Naspers, which derives much of its valuation from its stake in Tencent, were the only exceptions.

Most Overweight Positions

Source: eVestment Holdings Analysis

CompanyWeight vs. MSCI EMEM All Cap Portfolio Weight
AIA Group Limited+1.31%
1.31%
Housing Development Finance Corp+1.26%
2.11%
Kotak Mahindra Bank Ltd+0.67%
0.67%
Kering+0.60%
0.60%
Novatek Pub Joint Stock Co+0.49%
0.84%
Credicorp+0.45%
0.72%
Huazhu Group Ltd+0.40%
0.48%
Yandex Nv+0.40%
0.40%
Glencore Plc+0.38%
0.38%
Budweiser Brewing Co Apac Ltd+0.38%
0.38%

Most Underweight Positions

Source: eVestment Holdings Analysis

CompanyWeight vs. MSCI EMEM All Cap Portfolio Weight
Tencent Holdings Limited-1.60%
2.89%
Alibaba Group Holding Ltd-1.30%
3.14%
Samsung Electronics Co-0.85%
2.80%
China Construction Bank-0.80%
0.57%
Sk Hynix Inc-0.61%
0.10%
Taiwan Semiconductor MFG-0.58%
3.46%
Naspers-0.52%
0.72%
Reliance Industries-0.52%
0.48%
China Mobile Ltd-0.46%
0.49%
Baidu Inc-0.44%
0.09%

We also include the top 10 holdings measured on an equal-weighted basis below. 5 of the top 10 underweights (orange) made the list indicating broad ownership, but low conviction among large managers. At the other end of the spectrum, we see HDFC and AIA are both broadly owned and overweight on an asset-weighted basis, i.e.: consensus longs among EM all cap managers. Ping An, Sberbank and Lukoil were moderately overweight on an asset-weighted basis ranging from +15 to +30 bps against the benchmark.

Top 10 Holdings on an Equal-Weighted Basis

Source: eVestment Holdings Analysis

CompanyPortfolio Weight (Equal-weighted)Included in Portfolios (% of Total)
Taiwan Semiconductor MFG3.56%
77%
Samsung Electronics Co3.51%
78%
Tencent Holdings Limited3.26%
72%
Alibaba Group Holding Ltd3.15%
69%
Ping An Insurance Grp Co Of China1.71%
64%
Housing Development Finance Corp1.61%
61%
Sberbank Of Russia1.11%
62%
Naspers1.04%
57%
Oil Company Lukoil Pjsc0.90%
51%
AIA Group Limited0.88%
39%
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