Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

The last decade has seen EMEA allocations in active GEM portfolios drift ever lower, with Asia becoming the dominant weight.  However, the recent rhetoric from China has seen Asian allocations fall from their peak and EMEA allocations rally from their lows.  Average weights in EMEA stocks stand at 13.72%, marginally overweight the iShares MSCI Emerging Markets ETF by 0.24%, with just under half of the active managers in our analysis overweight. <ul>
<li>Over the course of the last decade, exposure to each EMEA sector has either fallen dramatically or at best stayed largely unchanged.  Those that have seen a big decline in investment are led by EMEA Industrials and Health Care, with over 40% of investors closing exposure.  </li>
<li>The largest sector exposure, EMEA Financials allocations sit towards the lower-end of their historical range.  Top holdings are <a href="https://www.smartkarma.com/entities/sberbank-of-russia-pjsc" target="_blank" data-smartkarma-citation="entities:24142:1" rel="noopener">Sberbank Of Russia Pjsc (SBER LI)</a> and <a href="https://www.smartkarma.com/entities/otp-bank-nyrt" target="_blank" data-smartkarma-citation="entities:28806:1" rel="noopener">OTP Bank Nyrt (OTP HB)</a> with 59% and 31% of funds invested respectively.  <a href="https://www.smartkarma.com/entities/tcs-group-holding-plc" target="_blank" data-smartkarma-citation="entities:28148:1" rel="noopener">TCS Group Holding PLC (TCS LI)</a> and <a href="https://www.smartkarma.com/entities/capitec-bank-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27628:1" rel="noopener">Capitec Bank Holdings Ltd (CPI SJ)</a> saw ownership levels increase the most over the last 6-months.</li>
<li>Consumer Discretionary weights hit another all-time high this month of 1.46%, representing a 1.04% overweight versus the iShares MSCI EM ETF.  Underpinning the overweight are out-of-benchmark holdings in <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> and Fix Price Group, though in general stocks in the sector are not widely held.  Funds with big overweights are led by Comgest's GEM Promising Companies Fund (8.98%) and Van Eck's Emerging Markets Fund (7.21%).  </li>
<li>With active ownership declining throughout 2020, <a href="https://www.smartkarma.com/entities/gazprom-pjsc" target="_blank" data-smartkarma-citation="entities:23749:1" rel="noopener">Gazprom PJSC (GAZP RX)</a> has finally been the recipient of some inflows.  Over the last 6-months, 2% of funds added Gazprom to their portfolios with a combined $217m in inflows.  Leading those were Fidelity (2.7%), Virtus Allianz (2.67%) and JP Morgan ($64m).</li>
</ul>The analysis looks in detail at all sectors in the EMEA region, together with some of the key stocks that underpin investment in the region.Analysis taken from our GEM fund research, covering 250 active GEM strategies with combined AUM of $500bn

The last decade has seen EMEA allocations in active GEM portfolios drift ever lower, with Asia becoming the dominant weight.  However, the recent rhetoric from China has seen Asian allocations fall from their peak and EMEA allocations rally from their lows.  Average weights in EMEA stocks stand at 13.72%, marginally overweight the iShares MSCI Emerging Markets ETF by 0.24%, with just under half of the active managers in our analysis overweight. 
Over the course of the last decade, exposure to each EMEA sector has either fallen dramatically or at best stayed largely unchanged.  Those that have seen a big decline in investment are led by EMEA Industrials and Health Care, with over 40% of investors closing exposure.  
The largest sector exposure, EMEA Financials allocations sit towards the lower-end of their historical range.  Top holdings are Sberbank Of Russia Pjsc (SBER LI) and OTP Bank Nyrt (OTP HB) with 59% and 31% of funds invested respectively.  TCS Group Holding PLC (TCS LI) and Capitec Bank Holdings Ltd (CPI SJ) saw ownership levels increase the most over the last 6-months.
Consumer Discretionary weights hit another all-time high this month of 1.46%, representing a 1.04% overweight versus the iShares MSCI EM ETF.  Underpinning the overweight are out-of-benchmark holdings in Prosus (PRX NA) and Fix Price Group, though in general stocks in the sector are not widely held.  Funds with big overweights are led by Comgest's GEM Promising Companies Fund (8.98%) and Van Eck's Emerging Markets Fund (7.21%).  
With active ownership declining throughout 2020, Gazprom PJSC (GAZP RX) has finally been the recipient of some inflows.  Over the last 6-months, 2% of funds added Gazprom to their portfolios with a combined $217m in inflows.  Leading those were Fidelity (2.7%), Virtus Allianz (2.67%) and JP Morgan ($64m).
The analysis looks in detail at all sectors in the EMEA region, together with some of the key stocks that underpin investment in the region.Analysis taken from our GEM fund research, covering 250 active GEM strategies with combined AUM of $500bn

EMEA Sectors Deep-Dive.  Active Positioning in the EMEA Region

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. Companies mentioned this week:<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/yandex-nv-a" target="_blank" data-smartkarma-citation="entities:414:1" rel="noopener">Yandex (YNDX US)</a>, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a>, Ant Financial, <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a>, <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. Companies mentioned this week:Tencent (700 HK), NetEase (9999 HK), Yandex (YNDX US), Prosus (PRX NA), Naspers (NPN SJ), Ant Financial, NIO Inc (NIO US), DiDi Global (DIDI US), JD.com Inc. (9618 HK), Alibaba Group (9988 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK) 

Global Emerging Markets Weekly: 3 September 2021

Equity Bottom-Up

Following the completion of <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>’ voluntary exchange offer for <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> shares, we are left with management having achieved their goal of meaningfully reducing Naspers’ overweight position on the notable South African equity indices (a key driver of the discount to NAV), and increasing the Prosus free float materially, with a commensurate increase in index weightings. It has also left us with a cross-holding structure which has significantly increased the complexity of trading dynamics, increased currency risk exposures, and a reduced corporate governance perception of the group. 
In a detailed insight last year (<a href="https://www.smartkarma.com/insights/naspers-double-discount-warranted-the-search-for-a-catalyst-continues" target="_blank" data-smartkarma-citation="insights:44014" rel="noopener">Naspers: “Double” Discount Warranted? The Search for a Catalyst Continues</a>), I analysed what I believed to be the 6 key drivers of Prosus’ and Naspers’ holding company discounts to find a catalyst for value unlock, and perhaps an interesting, discounted entry point to <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>. Following the exchange offer, which has just been concluded, I revisit these drivers and update the fundamental sum-of-the-parts valuations for both Prosus and Naspers.

Following the completion of Prosus (PRX NA)’ voluntary exchange offer for Naspers (NPN SJ) shares, we are left with management having achieved their goal of meaningfully reducing Naspers’ overweight position on the notable South African equity indices (a key driver of the discount to NAV), and increasing the Prosus free float materially, with a commensurate increase in index weightings. It has also left us with a cross-holding structure which has significantly increased the complexity of trading dynamics, increased currency risk exposures, and a reduced corporate governance perception of the group. 
In a detailed insight last year (Naspers: “Double” Discount Warranted? The Search for a Catalyst Continues), I analysed what I believed to be the 6 key drivers of Prosus’ and Naspers’ holding company discounts to find a catalyst for value unlock, and perhaps an interesting, discounted entry point to Tencent (700 HK). Following the exchange offer, which has just been concluded, I revisit these drivers and update the fundamental sum-of-the-parts valuations for both Prosus and Naspers.

Prosus/Naspers: Fundamental Drivers of the Discount Revisited Post the Exchange Offer

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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This week in StubWorld ...
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Cashed-up <a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a> is in the market every day as its shares trade around all-time lows on an implied stub and simple ratio basis.
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Preceding my comments on CKH are the weekly setup/unwind tables for Asia-Pacific Holdcos.
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These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.
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This week in StubWorld ...




Cashed-up CK Hutchison Holdings (1 HK) is in the market every day as its shares trade around all-time lows on an implied stub and simple ratio basis.




Preceding my comments on CKH are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


Travis Lundy

I said on Monday that I would have wanted to be long the <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> discount to <a href="https://www.smartkarma.com/entities/prosus-nv-2e2a2230-64b0-4044-b797-a3880fcb487a" target="_blank" data-smartkarma-citation="entities:28301:1" rel="noopener">Prosus NV (PRX SJ)</a> Exchange Offer Terms (i.e. short Naspers vs PRX) at 670bp which is where it was as I published <a href="https://www.smartkarma.com/insights/naspers-deal-done-flex-participation-and-pro-ration-misunderstandings-and-index-changes-galore" target="_blank" data-smartkarma-citation="insights:56011" rel="noopener">Naspers Deal Done - Flex Participation and Pro-Ration, Misunderstandings, and INDEX CHANGES GALORE!</a>That turned out OK.It traded to the 1600-1700bp level late in the day and appears to have closed at ~19% on a sharp move in both names at the South African close. The Dutch ticker for <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> saw a substantial pick-up in volume after the South African close and the final print was on roughly €2.7bn of volume but the shares fell 1% in the last five minutes then 2.5%+ on the final print.  So that's done. It was good to be bearish. Now we look at the NEXT step. First, there will be SOME DATA collected on 20 August. It is not clear whether it will be disclosed on 23-24 Aug (some people will know it because it is paid data, but it may not be that publicly known, and I may not know it, even if I have a pretty good idea) or if it will be disclosed only on the first of September when OTHER DATA will be disclosed. At that time, I expect some people will be mildly surprised. There is a chance of STILL OTHER INPUT to be disruptive. If that happens, then there could be a flip-flop on the September event, and I will be surprised. But I rather expect any decision on STILL OTHER INPUT will be left until Q4 at the very earliest. Weirdly, the SOME DATA and OTHER DATA will cause Some People to do Some Things which will, interestingly, cause NEXT STAGE OTHER DATA to be created. That will in turn cause the above-mentioned Some People to do Some of the Same Things again in December.It is weirdly recursive, but that is the way the cookie crumbles.It is worth looking at how this shakes out.

I said on Monday that I would have wanted to be long the Naspers (NPN SJ) discount to Prosus NV (PRX SJ) Exchange Offer Terms (i.e. short Naspers vs PRX) at 670bp which is where it was as I published Naspers Deal Done - Flex Participation and Pro-Ration, Misunderstandings, and INDEX CHANGES GALORE!That turned out OK.It traded to the 1600-1700bp level late in the day and appears to have closed at ~19% on a sharp move in both names at the South African close. The Dutch ticker for Prosus (PRX NA) saw a substantial pick-up in volume after the South African close and the final print was on roughly €2.7bn of volume but the shares fell 1% in the last five minutes then 2.5%+ on the final print.  So that's done. It was good to be bearish. Now we look at the NEXT step. First, there will be SOME DATA collected on 20 August. It is not clear whether it will be disclosed on 23-24 Aug (some people will know it because it is paid data, but it may not be that publicly known, and I may not know it, even if I have a pretty good idea) or if it will be disclosed only on the first of September when OTHER DATA will be disclosed. At that time, I expect some people will be mildly surprised. There is a chance of STILL OTHER INPUT to be disruptive. If that happens, then there could be a flip-flop on the September event, and I will be surprised. But I rather expect any decision on STILL OTHER INPUT will be left until Q4 at the very earliest. Weirdly, the SOME DATA and OTHER DATA will cause Some People to do Some Things which will, interestingly, cause NEXT STAGE OTHER DATA to be created. That will in turn cause the above-mentioned Some People to do Some of the Same Things again in December.It is weirdly recursive, but that is the way the cookie crumbles.It is worth looking at how this shakes out. 

Naspers/Prosus Initial Index Changes Done, Now To Reverse the Trade

China

Prosus N.V. provides internet based services. The Company focuses on investments in internet, digital media, e-commerce retailing, and consumer internet companies. Prosus serves customers worldwide.

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Prosus NV (PRX NA)

EMEA Sectors Deep-Dive. Active Positioning in the EMEA Region

The last decade has seen EMEA weights drift ever lower. We look in detail at all sectors in the EMEA region, together with some of the key stocks...

Steven Holden

Global Emerging Markets Weekly: 3 September 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Prosus/Naspers: Fundamental Drivers of the Discount Revisited Post the Exchange Offer

In this insight, and following the completion of their exchange offer, I revisit what I believe to be the 6 key fundamental drivers of the Naspers...

Wium Malan, CFA

StubWorld: CK Hutch's Ongoing Buybacks

CKH looks cheap here priced at 6.8x/0.4x forward PE/PBR, together with a 50% discount to NAV. Expect buybacks to continue. Recommend an outright...

David Blennerhassett

Naspers/Prosus Initial Index Changes Done, Now To Reverse the Trade

The short Naspers long Prosus trade on the back end Monday worked a charm. Now it's time to reverse it. This was a trade of steps. Still is.

Travis Lundy

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