During the second quarter, the top five companies that are most widely held in emerging market equity funds are all technology firms: Samsung, Taiwan Semiconductor, Tencent Holdings, Alibaba and Naspers, according to the report.
On the sector level, EM fund managers increased weightings to technology during the quarter, but the MSCI Emerging Markets Index had a higher increase to the sector at 2.03%, according to the report.
Despite the dominance of tech stocks in EM portfolios, managers of these funds, as a whole, are still underweight the sector. The EM strategies have an average of 19.1% of their holdings in technology versus 26.8% for the MSCI Emerging Markets Index.
Tech may be what is driving EM equity performance overall. The tech sector run in EM has been impressive, beating the broader EM equity universe, according to FE data.
Over a three-year-period, the MSCI Emerging Markets Information Technology Index returned 65.11%, versus 14.04% of the broader index.