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

Equity Bottom-Up

From a positioning perspective, our analysis shows that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> is one of the largest underweights in Asia and highly under-owned versus its own historical levels.  Just 12.7% of Global managers hold a position in <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> , down from a high of 31% in 2013.Despite these low investment levels, there are signs that sentiment is starting to turn across a number of our holdings metrics;  average weights have moved off the lows, the percentage of funds invested has increased and the net underweight is at it's lowest level in a decade.For Global managers, to hold nothing in Toyota aligns you with the majority of active peers and risks underperformance against the benchmark should the investment case for Toyota improve, as highlighted in <a href="https://www.smartkarma.com/profiles/mio-kato" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato's</a> bullish thesis <a href="https://www.smartkarma.com/insights/toyota-real-strength-shining-through" target="_blank" data-smartkarma-citation="insights:48014" rel="noopener">Toyota – Real Strength Shining Through</a> .  To hold an overweight, although being out-of-consensus, has the potential to drive outperformance against both active and passive peers.  Furthermore, should sentiment turn, the flow effect of Global funds buying back in to <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> will be supportive.Analysis taken from our Global active fund research, covering 386 managers with combined AUM of $960bn

From a positioning perspective, our analysis shows that Toyota Motor (7203 JP) is one of the largest underweights in Asia and highly under-owned versus its own historical levels.  Just 12.7% of Global managers hold a position in Toyota Motor (7203 JP) , down from a high of 31% in 2013.Despite these low investment levels, there are signs that sentiment is starting to turn across a number of our holdings metrics;  average weights have moved off the lows, the percentage of funds invested has increased and the net underweight is at it's lowest level in a decade.For Global managers, to hold nothing in Toyota aligns you with the majority of active peers and risks underperformance against the benchmark should the investment case for Toyota improve, as highlighted in Mio Kato's bullish thesis Toyota – Real Strength Shining Through .  To hold an overweight, although being out-of-consensus, has the potential to drive outperformance against both active and passive peers.  Furthermore, should sentiment turn, the flow effect of Global funds buying back in to Toyota Motor (7203 JP) will be supportive.Analysis taken from our Global active fund research, covering 386 managers with combined AUM of $960bn

Toyota Motor (7203):  Chronically Underinvested:  Turnaround Potential

Cross Asset Strategy

<ul>
<li>US underweight rises to highest ever level among Global investors</li>
<li>Tech and Consumer Discretionary outperformance drives underweights higher</li>
<li>Increasing underweight driven by passive inflows as large cap stocks dominate indices.</li>
<li>Active funds running larger underweight positions among top index constituents.</li>
<li>Active buying to close underweight holdings fuels the fire of the large-cap rally further still.</li>
</ul>Analysis taken from our global active manager research, covering 391 global funds with a combined AUM of $750bn


US underweight rises to highest ever level among Global investors
Tech and Consumer Discretionary outperformance drives underweights higher
Increasing underweight driven by passive inflows as large cap stocks dominate indices.
Active funds running larger underweight positions among top index constituents.
Active buying to close underweight holdings fuels the fire of the large-cap rally further still.
Analysis taken from our global active manager research, covering 391 global funds with a combined AUM of $750bn

The Anatomy of the US Underweight (And the Effect of Rising Passive ETF Flows in the US).

Thematic (Sector/Industry)

US Financials allocations continue to drift lower, however they remain widely held among active managers. Banks are the key driver behind the move, though Capital Markets stocks are bucking the trend.The analysis is taken from our Global Fund Universe of 413 global equity funds with a combined AUM of $760bn.

US Financials allocations continue to drift lower, however they remain widely held among active managers. Banks are the key driver behind the move, though Capital Markets stocks are bucking the trend.The analysis is taken from our Global Fund Universe of 413 global equity funds with a combined AUM of $760bn.

US Financials: Banks Overhang, Capital Markets Gain.

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/123/994/original/2020-03-21_07-26-58.png?1584743238" class="editor-image img-responsive" data-smartkarma-image-id="123994"></figure><div class="content-caption">Source • Japan Analytics</div>TAKE PROFITS - Japanese equities, as measured by the TOPIX Index, rose by 1.7% over the last week in Yen terms and fell by only 0.86% in US dollars, while <a href="https://www.smartkarma.com/entities/ishares-msci-acwi-etf" target="_blank" data-smartkarma-citation="entities:24402:1" rel="noopener">ACWI (ACWI US)</a> fell by 13.6%. The 1% gain on Thursday was aided by the Bank of Japan US$1.8 billion purchase of ETFs which represented 4.3% of the value traded in TOPIX and is 80% of the average monthly total of such purchases over the last nine years. We expect the central bank to be in the market again at a similar level of commitment on Monday. We would use such generosity to now reduce exposure to Japan.<div class="content-highlight">In the DETAIL section below, we cover the outlook for a more prolonged Covid-19 bear market in Japan and suggest levels at which the market might offer some absolute value, hopefully within the next eighteen months.</div><blockquote>If there is no market economy, then the stock market is in a sense largely irrelevant at this time, although we would not close it either since it does give people something to do that does generate some information and some amount of GDP and income - Andrew Hunt</blockquote>

Source • Japan AnalyticsTAKE PROFITS - Japanese equities, as measured by the TOPIX Index, rose by 1.7% over the last week in Yen terms and fell by only 0.86% in US dollars, while ACWI (ACWI US) fell by 13.6%. The 1% gain on Thursday was aided by the Bank of Japan US$1.8 billion purchase of ETFs which represented 4.3% of the value traded in TOPIX and is 80% of the average monthly total of such purchases over the last nine years. We expect the central bank to be in the market again at a similar level of commitment on Monday. We would use such generosity to now reduce exposure to Japan.In the DETAIL section below, we cover the outlook for a more prolonged Covid-19 bear market in Japan and suggest levels at which the market might offer some absolute value, hopefully within the next eighteen months.If there is no market economy, then the stock market is in a sense largely irrelevant at this time, although we would not close it either since it does give people something to do that does generate some information and some amount of GDP and income - Andrew Hunt

🇯🇵 JAPAN MARKET UPDATE • Hit the BoJ Bid and Wait for the Absolute Value Opportunity

A brief note on how rising allocations in Japan among global funds have stalled since the start of the year.  <h2>Latest Positioning Overview</h2>Japan's average weight in global portfolios stands at 6.84%, being both the 3rd largest country allocation after the US and the UK but also the third largest underweight after the US and Australia.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/048/280/original/Picture1.png?1522121596" class="editor-image img-responsive" data-smartkarma-image-id="48280"></figure>Sector allocations are dominated by industrials (1.59%), consumer discretionary (1.21%) and technology (1.16%).  Only telcos and tech are held overweight with…

A brief note on how rising allocations in Japan among global funds have stalled since the start of the year.  Latest Positioning OverviewJapan's average weight in global portfolios stands at 6.84%, being both the 3rd largest country allocation after the US and the UK but also the third largest underweight after the US and Australia.Sector allocations are dominated by industrials (1.59%), consumer discretionary (1.21%) and technology (1.16%).  Only telcos and tech are held overweight with…

United States

iShares MSCI ACWI ETF is an exchange-traded fund incorporated in the USA. The ETF tracks the performance of the MSCI All Country World Index and holds over 1200 equities in developed and emerging markets. The ETF weights its holdings using a representative sampling indexing strategy, generally investing at least 90% of its assets in the underlying index.

iShares MSCI ACWI ETF (ACWI US)

Toyota Motor (7203): Chronically Underinvested: Turnaround Potential

Toyota Motor (7203 JP) is one of the largest underweights in Asia and highly under-owned versus its own historical levels. Among Global active...

Steven Holden

The Anatomy of the US Underweight (And the Effect of Rising Passive ETF Flows in the US).

ETF inflows drive underweights in US equities to record levels. Active buying to close underweights in major index stocks fuels the rally further...

Steven Holden

US Financials: Banks Overhang, Capital Markets Gain.

US Financials allocations continue to drift lower, however they remain widely held among active managers. Banks are the key driver behind the move,...

Steven Holden

🇯🇵 JAPAN MARKET UPDATE • Hit the BoJ Bid and Wait for the Absolute Value Opportunity

TAKE PROFITS - Japanese equities, as measured by the TOPIX Index, rose by 1.7% over the last week in Yen terms and fell by only 0.86% in US...

Campbell Gunn

Global Funds - Japan Momentum Stalls

A brief note on how rising allocations in Japan among global funds have stalled since the start of the year. Latest Positioning OverviewJapan's...

Steven Holden