Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Steven Holden is the CEO and Founder of Copley Fund Research, an independent provider of research on equity fund positioning and performance.  Set up in 2014, Copley focuses on global, global emerging market, US, Asia Ex-Japan and China active equity funds, covering over $4tr in assets across 1300 active managers.  The company provides data and analysis on market trends, manager exposures and active fund performance to an audience of investment managers, pension funds and fund selectors worldwide.  Mr Holden’s 14-year investment banking career started in 2000, where he worked for Morgan Stanley as an equity derivative trader focused on emerging markets in London.  Following this, he spent 4 years at Citibank in London and Hong Kong as an Executive Director in derivative sales, focused again on emerging markets.

Asset Allocation & Fund Positioning

Global Funds China Fall:  Gap to US Largest in History

EM Consumer Discretionary:  Turbulent Times for Alibaba

Alibaba (BABA US) – No Longer the Black Sheep?

Alibaba (BABA US): Why I Remain Constructive

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

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

Alibaba Group Holding  / Equity Bottom-Up

In this analysis, we analyse <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> holdings across Global, GEM, US, Asia Ex-Japan and China equity funds.  We identify a massive holding base in Alibaba Group among active US domestic funds, with $24bn in out-of-benchmark Alibaba holdings as of October 2020, when Alibaba was at it's peak.Since then, although ownership and exposure has dropped across all fund groups, US Mutual Funds have capitulated, closing over $10bn in Alibaba positions since October of last year.   US managers have clearly had the hardest time justifying a holding in Alibaba Group during such a period of intense scrutiny - an out of benchmark, non-US position in an industry beset by regulatory pressure.  A degree of forced selling was inevitable. However, we note that these positions are finite, the selling will come to an end and the overhang will subside.  Our analysis shows a remaining $7.25bn in holdings among US managers, some of which will doubtless be sold, or indeed has already been sold.As the valuation case for Alibaba becomes more compelling, many of the Global, GEM, Asia or China managers in our analysis will be looking to increase exposure, nullifying or reducing underweights after such a period of stock underperformance (or relative outperformance vs their respective benchmarks).  Given these factors, investors should have more confidence in re-engaging with the investment case in Alibaba at this juncture, in our view.

In this analysis, we analyse Alibaba Group (BABA US) holdings across Global, GEM, US, Asia Ex-Japan and China equity funds.  We identify a massive holding base in Alibaba Group among active US domestic funds, with $24bn in out-of-benchmark Alibaba holdings as of October 2020, when Alibaba was at it's peak.Since then, although ownership and exposure has dropped across all fund groups, US Mutual Funds have capitulated, closing over $10bn in Alibaba positions since October of last year.   US managers have clearly had the hardest time justifying a holding in Alibaba Group during such a period of intense scrutiny - an out of benchmark, non-US position in an industry beset by regulatory pressure.  A degree of forced selling was inevitable. However, we note that these positions are finite, the selling will come to an end and the overhang will subside.  Our analysis shows a remaining $7.25bn in holdings among US managers, some of which will doubtless be sold, or indeed has already been sold.As the valuation case for Alibaba becomes more compelling, many of the Global, GEM, Asia or China managers in our analysis will be looking to increase exposure, nullifying or reducing underweights after such a period of stock underperformance (or relative outperformance vs their respective benchmarks).  Given these factors, investors should have more confidence in re-engaging with the investment case in Alibaba at this juncture, in our view.

Alibaba Group Holdings Analysis:  US Funds Capitulate