A look at Asia tech overweights

Asset Class in Focus

Only two products out of roughly 5,000 mutual funds available to Hong Kong and Singapore investors have overweights in the four Asia tech heavyweights.

According to FE data, among the roughly 5,000 mutual funds available to Hong Kong and Singapore investors, only two products — the JP Morgan Asia Growth Fund and the Manulife Asian Equity Fund — have overweight positions in the top four constituents of the MSCI Asia ex-Japan index. The top four happen to be the region’s tech heavyweights: Tencent, Alibaba, Samsung Electronics and TSMC.

The two funds — which have had somewhat contrasting performance (chart below) — do not have excessive overweights to the four individual stocks. They tend to be lower than the average overweights of other funds that have taken top-heavy positions in some of the four Asian tech giants.

The exception is the JP Morgan fund’s outsized bet on TSMC, in which it has an 85% overweight holding compared to the average TSMC overweight of 60%.

In terms of numbers, Samsung Electronics has the most widespread appeal, with 128 funds overweight the stock.

In contrast, Tencent is the least popular of the four. Although it is the largest component of the index, few funds have taken an outsized bet. Only 46 funds are overweight the stock, which suffered severely in last year’s China market slump.


Top 4 Constituents of MSCI Asia ex-Japan Index

Stock

Country

Float Adj. Mkt Cap ($ billions)

Index Wt. %

Sector

Tencent

China

251.93

5.62

Communications Services

Alibaba

China

218.38

4.87

Consumer Discretionary

Samsung Electronics

South Korea

199.69

4.45

Info Tech

Taiwan Semiconductor

Taiwan

177.21

3.95

Info Tech

Source: MSCI, January 2019

Hong Kong and Singapore authorised mutual fund exposure

Stock

Number of funds o/w index

Average weighting %

Index weighting %

o/w index

Tencent

46

8.36

5.62

49%

Alibaba

101

7.54

4.87

55%

Samsung Electronics

128

6.82

4.45

53%

Taiwan Semiconductor

86

6.31

3.95

60%

Source: FE Analytics

 

Only 2 funds are overweight all four stocks

JP Morgan Asia Growth % weighto/w indexManulife Asian Equity % weighto/w index
Tencent

7.90

41%

7.06

26%

Alibaba

5.60

15%

6.43

32%

Samsung Electronics

6.50

46%

6.71

51%

Taiwan Semiconductor

7.30

85%

5.53

40%

Source: FE Analytics

 

JP Morgan Asia Growth Fund and Manulife Asian Equity Fund v MSCI Asia ex-Japan Index and Sector 

Source: FE Analytics. Three-year cumulative performance in US dollars.

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