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

<ul>
<li>Saudi Arabia overtakes China is the largest country underweight among EM active investors.</li>
<li>Despite exposure among active managers reaching all-time highs and new funds entering the market, index weights are outpacing active increases.</li>
<li>Nearly 3/4 of the 246 funds in our analysis are still without Saudi Arabia exposure. In our view, the rising ownership trend has a long way to run.</li>
</ul>


Saudi Arabia overtakes China is the largest country underweight among EM active investors.
Despite exposure among active managers reaching all-time highs and new funds entering the market, index weights are outpacing active increases.
Nearly 3/4 of the 246 funds in our analysis are still without Saudi Arabia exposure. In our view, the rising ownership trend has a long way to run.


Saudi Arabia:  Takes Underweight Crown from China

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

Founder & CEO. Oil markets macro-analysis., Vanda Insights

Vandana Hari

Founder & CEO. Oil markets macro-analysis.

Vanda Insights

Vanda Insights is a Singapore-based boutique provider of intelligence on the global energy markets, launched in September 2016. The venture was born out of a desire to extract the signal from the noise in the complex and often volatile oil markets. Our succinct and clear macro analysis is relied upon by thousands of readers globally, including those doing business directly or indirectly in the physical commodity and derivatives markets; wealth managers; governments, regulatory bodies and think-tanks; as well as trade organizations and educational institutions.

Global Energy Markets

Thematic (Sector/Industry)

<a href="https://www.smartkarma.com/entities/saudi-arabian-oil-co" target="_blank" data-smartkarma-citation="entities:27317:1" rel="noopener">Saudi ARAMCO (131861Z AB)</a>  on Sunday finally launched the formal process for its long-awaited initial public offering. 
Share sale will begin this month, and the stock is expected to start trading on the Tadawul on December 11. 
The "IPO of the century" , unveiled by Crown Prince Mohammed bin Salman in January 2016, has been whittled down, at least for the time being, to a domestic listing, which may see up to 3% of the company offered to the public.
The remainder of a total 5% stake-sale that MBS had originally flagged may be offered on the international markets at a later date, though there is no certainty around that.
The valuation of the company remains the subject of intense debate -- MBS would like to see a $2-trillion price tag, but analysts and investors see $1.2-1.5 trillion as more realistic. But that is not the only concern potential investors have. We look at the pros and cons of buying into the world's most profitable company.

Saudi ARAMCO (131861Z AB)  on Sunday finally launched the formal process for its long-awaited initial public offering. 
Share sale will begin this month, and the stock is expected to start trading on the Tadawul on December 11. 
The "IPO of the century" , unveiled by Crown Prince Mohammed bin Salman in January 2016, has been whittled down, at least for the time being, to a domestic listing, which may see up to 3% of the company offered to the public.
The remainder of a total 5% stake-sale that MBS had originally flagged may be offered on the international markets at a later date, though there is no certainty around that.
The valuation of the company remains the subject of intense debate -- MBS would like to see a $2-trillion price tag, but analysts and investors see $1.2-1.5 trillion as more realistic. But that is not the only concern potential investors have. We look at the pros and cons of buying into the world's most profitable company.

Aramco Unveils IPO: Pros and Cons of Buying the Saudi Crown Jewel

Commodities

The oil market is keeping global economic headwinds firmly in sight, with weakening manufacturing activity across several parts of the world in June serving a fresh reminder. 
Crude prices tend to jump if there is a big weekly drawdown in crude stocks, or a fresh incident triggers a spike in tensions in the oil-rich Middle East. But the rallies don't seem to have staying power. Market sentiment defaults to bearishness from demand growth fears. 
When the words “tentative” and “fragile” appear with mentions of the trade war truce agreed between presidents Trump and Xi barely a week after their meeting in Osaka, oil bulls know better than to try and take centre-stage again. 
Yes, some puzzle over why crude remains on a slippery slope despite supply restraints (OPEC cuts), constraints (Iran, Venezuela) and risks (Middle East tensions). We explore why some of these are being discounted, and for good reason.
The extension of output cuts wasn’t really the main news out of the OPEC/non-OPEC meetings in Vienna last week. We give you our take on what was more important.

The oil market is keeping global economic headwinds firmly in sight, with weakening manufacturing activity across several parts of the world in June serving a fresh reminder. 
Crude prices tend to jump if there is a big weekly drawdown in crude stocks, or a fresh incident triggers a spike in tensions in the oil-rich Middle East. But the rallies don't seem to have staying power. Market sentiment defaults to bearishness from demand growth fears. 
When the words “tentative” and “fragile” appear with mentions of the trade war truce agreed between presidents Trump and Xi barely a week after their meeting in Osaka, oil bulls know better than to try and take centre-stage again. 
Yes, some puzzle over why crude remains on a slippery slope despite supply restraints (OPEC cuts), constraints (Iran, Venezuela) and risks (Middle East tensions). We explore why some of these are being discounted, and for good reason.
The extension of output cuts wasn’t really the main news out of the OPEC/non-OPEC meetings in Vienna last week. We give you our take on what was more important.

Weekly Oil Views: Sentiment Defaults to Demand Growth Fears

After a lacklustre week of range-bound trading, crude ended higher on Friday, though well off its session highs. 
Crude was buoyed by strong investor cheer, which prompted an across-the-globe rally in the stock markets. The burst of euphoria was prompted by promising signs from the just-concluded high-level trade negotiations between the US and China in Beijing, though arguably throwing caution to the winds.
The American president fired his second tweet of the year at OPEC on Thursday. It was “very important that OPEC increase the flow of oil,” he said, because the price of oil was “getting too high.” The producers as well as market participants decided not to heed this time.
However, the pressure from Donald Trump is bound to intensify if Brent sustains a rally above $70, and OPEC and its Saudi leadership will not be able to continue ignoring it.
Aramco agreeing with the Public Investment Fund to buy 70% of petrochemicals giant <a href="https://www.smartkarma.com/entities/27316" target="_blank" data-smartkarma-citation="entities:27316:1">Saudi Basic Industries Corp (SABIC AB)</a> for $69.1 billion marks a new era for the companies. However, it does not mean that the Aramco IPO would be shelved, and directly or indirectly, we don't expect it to derail Saudi Arabia’s strategy of actively managing oil supply through OPEC.
Our chart of the week shows that speculative bets on a price rally continue to return to Brent and WTI futures, but cautiously.

After a lacklustre week of range-bound trading, crude ended higher on Friday, though well off its session highs. 
Crude was buoyed by strong investor cheer, which prompted an across-the-globe rally in the stock markets. The burst of euphoria was prompted by promising signs from the just-concluded high-level trade negotiations between the US and China in Beijing, though arguably throwing caution to the winds.
The American president fired his second tweet of the year at OPEC on Thursday. It was “very important that OPEC increase the flow of oil,” he said, because the price of oil was “getting too high.” The producers as well as market participants decided not to heed this time.
However, the pressure from Donald Trump is bound to intensify if Brent sustains a rally above $70, and OPEC and its Saudi leadership will not be able to continue ignoring it.
Aramco agreeing with the Public Investment Fund to buy 70% of petrochemicals giant Saudi Basic Industries Corp (SABIC AB) for $69.1 billion marks a new era for the companies. However, it does not mean that the Aramco IPO would be shelved, and directly or indirectly, we don't expect it to derail Saudi Arabia’s strategy of actively managing oil supply through OPEC.
Our chart of the week shows that speculative bets on a price rally continue to return to Brent and WTI futures, but cautiously.

Weekly Oil Views: Crude's Cursory Nod to US-China Deal Optimism Is Par for the Course

Saudi Arabia

Saudi Basic Industries Corporation (SABIC) manufactures chemicals and steel. The Company produces methanol, ethylene, propylene, benzene, toluene, xylene, industrial gases, thermoplastic resins, polyester, melamine, urea fertilizers, and long and flat hot and cold rolled steel products.

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Saudi Basic Industries (SABIC AB)

Saudi Arabia: Takes Underweight Crown from China

Saudi Arabia overtakes China is the largest country underweight among EM active investors. Despite exposure among managers reaching all-time...

Steven Holden

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

Aramco Unveils IPO: Pros and Cons of Buying the Saudi Crown Jewel

Saudi ARAMCO (131861Z AB) on Sunday finally launched the formal process for its long-awaited initial public offering. Share sale will begin this...

Vandana Hari

Weekly Oil Views: Sentiment Defaults to Demand Growth Fears

The oil market is keeping global economic headwinds firmly in sight, with weakening manufacturing activity across several parts of the world in...

Vandana Hari

Weekly Oil Views: Crude's Cursory Nod to US-China Deal Optimism Is Par for the Course

After a lacklustre week of range-bound trading, crude ended higher on Friday, though well off its session highs. Crude was buoyed by strong...

Vandana Hari

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