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Global Emerging Markets

Active GEM Funds: Performance & Attribution 2025

January 7th 2026

Executive Summary

• Strong Year for Active EM: Active GEM funds returned 32.2% in 2025, their second-best in 15 years, with nearly half outperforming the benchmark.

• Style & Regional Leaders: GARP and Value strategies led performance, boosted by South Korea-heavy positioning and tech exposure.

• Tech and North Asia Dominated: Technology alone added 13.2%, while Taiwan, South Korea, and China/HK contributed 70% of total returns.

• Concentrated Stock Impact: Just 10 stocks — including TSMC, SK Hynix, and Samsung — drove half the year’s gains.

• Attribution Wins & Losses: Outperformance came from underweights in Saudi and India and strong stock selection in Taiwan and Korea; cash drag and poor selection in China/South Africa weighed.

• Passive Still Average: The MSCI EM ETF again landed near the 50th percentile, continuing a long-term trend of middling returns versus active peers.

A Strong Year for Emerging Markets

Active GEM funds enjoyed one of their strongest years in over a decade, delivering an impressive average return of 32.2% in 2025 — their second-best annual performance in the last 15 years. Despite falling just short of the iShares MSCI EM ETF, nearly half of active managers managed to outperform the benchmark.

The top of the performance table was dominated by South Korea-heavy strategies, with Macquarie and a cluster of Value and GARP-oriented funds leading the charge. GARP strategies emerged as the best-performing style group, posting average returns of 37.8%, followed closely by Value funds at 36.5%. In contrast, Aggressive Growth funds lagged well behind, averaging just 25.97%, while Small and Midcap strategies also underperformed.  With an 83% gap between the best and worst performer, it once again highlights the breadth and diversity of the EM active universe.

Asian Technology Drives Returns

The charts below break down the components of the 32% average return for active GEM funds in 2025, using a portfolio based on managers’ aggregate holdings. At the sector level, Technology was by far the largest contributor, adding 13.2% to returns. Financials followed at 7.6%, with Communication Services, Consumer Discretionary, Industrials, and Materials each contributing between 2.5% and 3%.

From a country perspective, Taiwan, South Korea, and China & Hong Kong were the dominant drivers, together contributing 23.5% — around 70% of total returns. Leading country-sector combinations included South Korea and Taiwan Technology. On the downside, a handful of areas pulled returns lower, with India Tech, Argentina Tech, and Indonesian Financials together costing just under 0.9%.

Stock Level Influence
At the stock level, just 10 names accounted for half of the year’s returns — led by TSMC, SK Hynix, and Samsung Electronics. Standout gains from select South Korean stocks, including SK Hynix and SK Square, were major contributors, as were gold miners like Anglogold Ashanti and Gold Fields.

Losses were fewer and generally more modest. However, well-held positions in Meituan and Infosys weighed on performance, ranking among the year’s key detractors.

Performance Attribution – Where Funds Beat the Benchmark
The chart below highlights the main sources of outperformance and underperformance versus the benchmark at the country level. The biggest contributors were large underweights in Saudi Arabia and India, alongside strong stock selection in Taiwan and South Korea.

On the negative side, returns were held back by cash drag, overweights in Argentina and Indonesia, and weak stock selection in China and South Africa.

Stock Attribution
Active EM managers gained from net overweights in key outperformers such as SK Hynix and SK Square, with smaller positive contributions from Delta Electronics and ASPEED Technologies. Underweights in weaker names — including Meituan, Saudi Aramco, International Company for Water & Power, and Xiaomi — also added to relative performance.

On the negative side, a 2.5% net cash position limited upside, while underweights in TSMC and Alibaba meant managers missed out on key benchmark gains. Overweights in Globant, MakeMyTrip, and MercadoLibre also detracted from relative returns.

Long-Term Performance
This year’s mild underperformance adds to a small shortfall in 2024, yet the broader picture remains clear: over the past 22 years, active GEM funds have outperformed in 14 of them — and typically by a greater margin than in the years they’ve lagged.

Meanwhile, the iShares MSCI EM ETF has consistently delivered middling results, rarely straying far from the 50th percentile and never ranking among the top performers. For investors seeking to capture the full potential of EM, a purely passive approach has proven to be — at best — an average decision.

Performance & Attribution Report

Click the link opposite for full charts and data detailing the drivers of 2025 performance, along with a review of 3-, 5-, and 10-year results across the active EM peer group.

Global Emerging Markets

China & HK Industrials: EM’s Key Overweight Grows Stronger

December 18th 2025

Executive Summary
China Industrials have become one of the clearest expressions of conviction within the Global EM equity landscape. Despite a declining benchmark weight, active managers have steadily increased exposure, backed by record participation, broad stock-level engagement, and clear signs of fresh inflows.

While headline names like CATL dominate fund holdings, investor interest is widening to a deeper bench of emerging players. At the same time, the sector’s second tier continues to reflect shifting investor sentiment — a reminder that while conviction is high, positioning remains selective.

But the message is clear: China Industrials are back in focus, and for now, fund managers are positioning with increased conviction.

Click on the Report Link below for access to the latest China & HK Industrials Market Intelligence Report.

China Industrials Fund Positioning:  Rising to new Highs
Exposure to China’s Industrials sector is gaining momentum. While the MSCI EM benchmark weight has gradually declined over the last 3 years (chart 10), active GEM fund allocations have been moving higher and are now closing in on all-time highs (chart 7). Participation has also widened, with a record 90.45% of funds now holding a position (chart 8). At the same time, both the net overweight (chart 13) and the share of funds overweight (chart 14) have climbed to new peaks, reflecting a growing sense of conviction across the active manager universe.

Peer Positioning:  THE Conviction Overweight
Among all country and sector combinations across the Global EM universe, China & HK Industrials stand out as a clear conviction overweight. They currently rank as the seventh largest active weight overall (chart 1) — behind the dominant Tech exposures in Taiwan and South Korea — and represent the fourth largest sector allocation within China & HK. But it’s the scale of the overweight that sets them apart: 76.4% of GEM funds are positioned above benchmark (chart 5), with an average active weight of +1.67%, far ahead of any other country/sector pair (chart 4). The breadth of investment is also notable, with holdings spread across 204 companies — a strong indication of the depth and diversity of opportunities that managers are finding in the space (chart 6).

Fund Rotation:  Strong Opening Activity
Fund activity in China Industrials has picked up meaningfully over the past year. Twenty-seven GEM funds have initiated new positions, compared to just nine closures, while existing holders like East Capital Global EM Sustainable and Amonis Equity EM have significantly added to their exposure. Although the sector hasn’t led in outright rotation versus other country/sector peers (see page 6 in the PDF report) , every key ownership metric has moved higher — a clear sign that active managers are adjusting positioning with growing confidence.

Stock Level Analysis:  Leaders emerge, but changing fortunes among 2nd tier.
At the stock level, a few clear leaders have emerged within the sector — but the picture further down the ranks is more mixed. Contemporary Amperex Technology (CATL) stands out as the most widely held name, with 51% of GEM funds in our analysis holding a position. As chart 114 shows, ownership has climbed over the past two years, reaching record highs. But the sector also features several examples of sharp reversals in sentiment. Names like NARI Technology (chart 115), Techtronic Industries (chart 116), and ZTO Express (chart 119) have all seen meaningful retreats in ownership after building up strong investor bases, underscoring the shifting fortunes and potential volatility that can come with owning companies in the sector.

Stock to Watch
Chart 120 highlights three names seeing the strongest pickup in ownership over the past year. Following CATL, both DiDi Global and Full Truck Alliance have attracted significant new interest, pushing fund participation to new highs. In contrast, chart 121 shows the biggest fallers, with NARI Technology, Sungrow Power Supply, and China Communication Services losing the most investors over the period. Looking ahead, several potential rising stars are emerging (chart 122). CMOC Group, Seiyuan Electric, and Anker Innovation — alongside Full Truck and DiDi — have seen rising inflows but remain lightly held, suggesting room for further adoption. Meanwhile, longer-term laggards such as China Conch Ventures, Harbin Electric, and ZhuZhou CRRC Time Electric were once widely owned but have since drifted off the radar.

AFI – Market Intelligence Report:  China & HK Industrials

Please click on the link opposite for the full positioning report on the China & HK Industrials sector.  It contains 133 charts, including fund-level detail at the country/sector, industry and stock level, breakdowns by Style, Market Cap Focus and Benchmark Independence, together with a full gap analysis on past holders and potential buyers in the sector.

Global Emerging Markets

Materials: The Recovery Trade

December 15th 2025

Executive Summary

The Materials sector is beginning to show signs of a meaningful turnaround within the GEM fund universe. Long overlooked and under-owned, it now stands out on our Ownership Cycle Grid as a rare case of low positioning combined with the strongest positive rotation of any sector over the past six months. While average active weights remain modest, they’ve started to recover from record lows, with broader fund participation and a narrowing net underweight suggesting that sentiment is beginning to shift.

This recovery is being driven in large part by renewed interest in China & HK and South African Materials, which have seen some of the sharpest increases in both participation and capital inflows. At the stock level, the rebound is visible in names like Gold Fields, Zijin Mining, and Anglo American, while a group of lightly held “rising stars” is starting to gain traction. Overall, sector exposure remains moderate, leaving clear room for allocations to catch up with other areas of the market — and potentially marking the early stages of a broader rebuild in Materials.

Click on the Report Link below for access to the latest EM Materials Market Intelligence Report.

Sentiment Beginning to Turn
Firstly, why are we focusing on the Materials sector at all this month? The starting point is our Ownership Cycle Grid — a framework designed to track where each country, sector, or stock sits in its positioning cycle. By combining long-term fund allocations with recent rotation trends, the Grid helps flag areas where sentiment may be turning. In this case, Materials stand out clearly in the bottom-right quadrant: a space typically associated with recovery candidates. Current positioning remains low, but the sector has seen the strongest positive rotation across our entire GEM fund universe over the past six months.

Materials Long-Term Trends
A closer look at fund ownership metrics across the Materials sector reinforces the early recovery story. Average active weights, which once peaked above 15%, have fallen sharply over the years and now sit at 4.7% — but that’s up from an all-time low of just 3.5% earlier this year (chart 7). Participation is also starting to turn. The share of funds holding exposure has ticked higher (chart 8), and the sector’s net underweight has narrowed from below -3% to -2.1% today (chart 13), suggesting a gradual rebuild in allocations is underway.

Country Drivers
Looking at country-level trends helps clarify the origin of the Materials rebuild. The biggest shifts have come in China & HK and South Africa, where the percentage of funds invested has jumped by 7.3% and 6.7% respectively over the past six months (chart 91) — among the strongest increases for any country/sector pair in EM. Active fund inflows of $665 million into China & HK and $416 million into South Africa (chart 92), along with a clear skew toward buyers over sellers (chart 95), point to deliberate rotation. Together, these trends have helped lift average weights across both markets (chart 90).

Stock Level Analysis:  Winners capture big rotation.
At the stock level, a handful of names have been key in driving the recent pickup in Materials positioning. As chart 107 shows, Gold Fields leads the pack, with an 8.7% increase in GEM fund participation over the past six months. Zijin Mining Group and Valterra Platinum have also seen solid gains in ownership. On the flip side, decreases have been less common and generally smaller, though names like GCC SAB and Sappi Limited did see modest but notable declines (chart 108). In terms of flows, Valterra Platinum, Zijin Mining, and Anglo American attracted the most capital, while outflows were concentrated in Freeport-McMoRan and Ambuja Cements (chart 109).

The Evolution of Ownership in Popular Materials Stocks
The chart set below tracks the percentage of funds invested over time for the 18 most widely held stocks in the Materials sector — and reveals a clear shift in sentiment toward selected names. Anglo American, Gold Fields, Zijin Mining, and Hindalco have all seen a strong rebound in ownership, climbing to recent highs after periods of being under-owned. Grupo Mexico also appears to be recovering, though participation remains well below previous peaks. In contrast, LG Chem stands out on the downside, with fund ownership falling sharply from 37% in late 2023 to just 13% today.

Stock to Watch
Chart 120 highlights the three stocks with the strongest pickup in fund ownership over the past year, while chart 121 captures the largest declines — with names like Sappi and GCC SAB now almost entirely off the EM fund ownership map. Chart 122 flags the sector’s rising stars: stocks at record ownership levels but still held by only 5% to 20% of managers. These include Chambal Fertilizers, Hindalco Industries, Tube Investments of India, Zijin Mining, and UPL Limited — all showing growing traction without yet being consensus positions. In contrast, chart 123 shows the secular decline in ownership of Sasol Limited, POSCO Holdings, and Impala Platinum — names that were once widely held but have not participated in the recent sector rotation.

Materials Latest Fund Positioning

Where does all this activity leave fund-level positioning in the Materials sector? Chart 31 shows a wide distribution of weights, but with most allocations clustered between 1% and 7% and a long tail of higher-conviction positions stretching up to 29%. In fact, 95% of all Materials allocations sit below 11% (chart 33), with half of them falling between 2.6% and 6.5% (chart 34). This suggests that, outside of a few high-conviction outliers, exposure to the sector remains relatively moderate. But with ownership metrics starting to turn and rotation gaining pace, there’s clear room for positioning to catch up to sector peers. Perhaps what we’re seeing is just the early stages of a more meaningful rebuild.

AFI – Market Intelligence Report:  Materials

Please click on the link opposite for the full positioning report on the EM Materials sector.  It contains 133 charts, including fund-level detail at the sector, country/sector and stock level, breakdowns by Style, Market Cap Focus and Benchmark Independence, together with a full gap analysis on past holders and potential buyers in the sector.

Global Emerging Markets

China & HK: Rebuild Slows Amid Heavy Sector and Stock Rotation

November 24th, 2025

Executive Summary
China & HK allocations among active EM funds have recovered from their late-2024 lows, rising from 21.5% to 26%, but momentum has stalled. Positioning remains well below historical highs, and China continues to sit as a structural underweight. Ownership is just below median historical levels, and fund flows suggest a lack of clear conviction.

Beneath this top-line stasis, however, positioning has been highly active. Industrials and Materials have seen renewed inflows, while exposure to Consumer sectors has fallen. Stock-level activity shows selective rotation into names like Pop Mart and Tencent Music, alongside exits from Meituan and JD.com.

With China among the better-performing EM markets year-to-date, and many funds still holding well below prior peak allocations, the case for re-engagement is growing—should sentiment continue to shift.Click on the Report Link below for access to the latest China & HK Market Intelligence Report, and scroll down for the chart highlights and narrative.

Country Positioning:  China Remains on Top
Allocations to China and Hong Kong among the GEM funds in our analysis now average 26% — a clear recovery from the late-2024 low of 21.5%, though still well below the 2020 peak of 37.5%. As exposure to China and HK has rebounded over the past two years, positioning in India has declined, while Taiwan has seen allocations rise to new highs. South Korea, typically confined to a narrow range, has also moved up from the lower end of its band.  The top 4 countries make up a combined 69.1% of the total average GEM fund portfolio.

Benchmark Positioning:  Underweight Intact
Relative to the iShares MSCI EM ETF (EEM), China & HK is the second-largest net underweight at -3.09%, just behind Taiwan at -3.19%, and ahead of India and Saudi Arabia, both at -1.94%. On the overweight side, positioning is led by cash and the major Latin American markets. Over time, allocations to South Korea have moved closer to benchmark, while Taiwan has overtaken China & HK as the largest underweight country position.

Ownership Cycles:  Momentum Stall
On our ownership cycle grid, China & HK sits just below its historical median in terms of fund positioning, and slightly left of center on the momentum axis. This reflects a lack of conviction rotation over the past six months—average weights have edged lower, buyer and seller counts are evenly balanced, the share of overweight funds has risen, yet fund outflows remain strong— see page 7 of the China Intelligence Report for more details.

High Active Investors are Underweight
While different fund styles show fairly similar allocations to China & HK, the larger divergence appears across levels of benchmark independence. High Active funds—those with active share above 75%—are significantly more underweight China & HK compared to their mid and low active peers, and have been for the past decade.

Fund-Level Positioning
The histogram of China & HK fund weights (ch31) shows a broad distribution, ranging from zero exposure up to a high of 45.25%. Despite this range, there’s a clear concentration of funds holding between 20% and 35%. As shown in chart 34, the interquartile range is relatively tight, with 50% of funds allocating between 24.76% and 30.25%.

China & HK’s Top Investors
The list of largest holders of China & HK includes three funds with allocations above 40%, led by Polunin Developing Countries at 45.25% and Oaktree Emerging Markets at 41.72%. What stands out is the diversity of strategies represented—spanning Value and Growth styles, Large Cap, Megacap, and Blend exposures, as well as a mix of high, medium, and low active share funds, including some ESG-focused strategies. The depth of China’s market, with over 1,000 individual Chinese stocks held across the fund universe, makes it structurally feasible for a wide range of portfolio types to build substantial allocations.

China’s Sector Landscape
Sector positioning within the China market is dominated by heavy allocations to Consumer Discretionary, Communication Services, and Financials—together accounting for 69% of the total China exposure. Industrials stands out as the only conviction overweight, held at +1.67% above the MSCI EM index. Underweights are led by Information Technology (-1.17%), Financials (-0.95%), and Consumer Discretionary (-0.92%).

China’s Heavy Sector Rotation
China sector rotation over the past six months stands out for the scale and clarity of positioning changes. These are active moves—driven by allocation decisions rather than passive price effects. Industrials were the primary beneficiary, with average fund weights rising by 0.62%, 1.4% of funds initiating exposure, $1.3bn in net inflows, a clear buyer tilt, and a +0.57% rise in net overweight. Materials also saw renewed interest, with 5% of GEM funds opening new positions. On the other side, Utilities, Consumer Discretionary, and Consumer Staples experienced broad reductions in exposure, with most ownership metrics trending lower.

China & HK Stock Ownership Picture
Despite the vast breadth of investable companies in China & HK, positioning remains heavily concentrated at the top end of the benchmark. Alibaba and Tencent are held by just over 77% of the active EM funds in our analysis, with average weights of 3.08% and 4.55%, respectively—both below their MSCI EM index weights. Beyond these, only NetEase and Contemporary Amperex Technology are held by more than half of the managers in our analysis. On the underweight side, notable names include Pinduoduo, Xiaomi Corp, and several of the large state-run Chinese banks.

Stock Rotation:  Big Shifts in Stock Ownership
Over the last six months, there has been notable rotation at the company level. The left-hand chart below shows a net 7.8% of active EM funds in our analysis initiating positions in Pop Mart International, with a further 6.7% opening exposure to both Jiangsu Hengrui Pharma and Tencent Music Entertainment. On the other side, Meituan and JD.com saw net outflows, with -13.7% and -10% of funds fully closing their positions.

The Big Fund-Level Stock Moves
Tencent Holdings tops the list of largest individual company weight increases, with sizeable new positions from Quilter Emerging Market (8.97%), Jupiter Emerging Markets (7.16%), and Artisan Sustainable EM (5.5%). Alibaba Group Holding and Contemporary Amperex Technology also ranked among the larger additions. On the sell side, Tencent and Alibaba appeared again, alongside Meituan, where Invesco, Quilter, and Ashmore were among the funds closing exposure.

Stock Ownership Trends
The six charts below track the progression of fund ownership across the 18 most widely held names in the China & HK market. Chart 103 highlights the clear lead held by Alibaba and Tencent over NetEase—a structural pattern that has persisted for the past decade. Notable long-term shifts include Xiaomi Corp (chart 105), where ownership has climbed from near zero to over 40% in just over two years. Pinduoduo (chart 108) has seen a sharp decline in ownership since its 2024 peak, while Contemporary Amperex Technology has rapidly gained traction, entering the top five most widely held Chinese stocks over a similar period.

Selected Stock Highlights
Chart 109 shows the companies with the strongest six-month rotation into active EM portfolios, led by Pop Mart, Jiangsu Hengrui Pharma, and Tencent Music—all reaching new highs in fund ownership. In contrast, Meituan, JD.com, and BYD have seen notable declines, reversing prior upward trends—though ownership in all three remains strong. Chart 111 highlights five stocks where ownership is at record highs but still below 20% of the fund universe. These names warrant closer attention, combining recent momentum with significant room for broader adoption. Finally, chart 112 shows China Mobile, CNOOC, and China Petroleum & Chemical continuing their long fade from the EM fund landscape, having once held much greater prominence.

Can China Recover Past Highs?
While China remains the largest country allocation by a wide margin, the current average weight of 26% sits well below prior highs. All aggregate exposures in our analysis—country, sector, and stock—are built from the bottom up, and many individual EM funds remain significantly underweight relative to their historical peaks. Below, we highlight a group of funds with the largest potential buy-side impact, based on their current AUM and the gap between today’s China weight and their past maximum exposure.

While overall China allocations remain muted compared to past highs, the scale of underlying rotation suggests investors are actively reshaping their exposure. With performance strengthening and positioning gaps still wide open, the potential for a broader re-engagement remains firmly on the table.

 

Emerging Markets Fund Performance & Attribution, Q3 2025

Active Global Emerging Market funds are delivering strong absolute performance in 2025, with average returns of 26.0% year-to-date – on track for their best calendar year since 2017. This strength is somewhat overshadowed by the benchmark’s 27.8% gain, translating to underperformance of -1.8% on average. Just under 40% of active EM funds have managed to beat the benchmark so far.

For more analysis, data or information on active investor positioning in your market, please get in touch with me on steven.holden@copleyfundresearch.com