Summary of Key Points from the Conference Call Industry Overview - The report focuses on the asset allocation and performance of major Emerging Market (EM) funds as of the end of July 2025, based on a survey of 56 fund managers conducted by EPFR Global [7][12]. Core Insights 1. **Increased Allocation to Korea and China**: - EM funds have increased their allocation to Korea, with net overweights rising to 3 from 2. - Foreign investors were net buyers of US$4.5 billion in Korean equities in July, marking the highest monthly total since February 2024 [5][22]. - China and Hong Kong saw significant inflows of US$4.3 billion and US$3.8 billion, respectively, in July, with consensus reducing net underweights in China+HK to 8 from 12 [5][22]. 2. **Domestic Investor Influence**: - The equity rally in China was primarily driven by domestic investors, with southbound investors net buying US$14.3 billion of HK-listed equities in August, maintaining a participation rate of approximately 28% in HK turnover [5][22]. 3. **Reduced Exposure in LatAm and ASEAN**: - Consensus cut exposure in Latin America and ASEAN regions, with net overweights in Brazil and Mexico decreasing to 20 from 23 and 5 from 8, respectively [5][22]. - EM funds increased net underweights in Indonesia, Thailand, the Philippines, and Malaysia to 9, 24, 27, and 41 from 4, 23, 25, and 37, respectively [5][22]. 4. **Performance Metrics**: - The MSCI EM index rose by 1% over the past month, with the median fund outperforming the benchmark by 90 basis points [5][22]. - Sectors that significantly outperformed included Brazil Financials, South Africa Materials, and China IT [22]. 5. **Fund Performance Trends**: - The number of funds outperforming the benchmark increased over the past month, with a rise in the dispersion of six- and twelve-month returns [15][22]. - The median beta of EM funds is currently below its five-year average, indicating lower volatility compared to historical performance [15][22]. Additional Important Insights 1. **Cash Allocation**: - Local fund managers in Malaysia reduced cash allocation to approximately 10.3%, deploying 1.3% of cash [5][22]. 2. **Market Sentiment**: - Price momentum, net analyst revision, and size were identified as outperforming quant factors, while reversion, beta, and volatility were key underperformers [22]. 3. **Historical Fund Flows**: - Historical net inflows and outflows from EM funds were noted, with a significant net outflow of US$31.3 billion in 2024 and a year-to-date outflow of US$5.4 billion in 2025 [11]. 4. **Sector Performance**: - The report highlighted that Brazil Consumer Staples, Colombia, Chile, and Turkey also showed strong performance in the past month [22]. 5. **Market Classification Issues**: - There were potential misclassifications of China stocks as Hong Kong, which may affect the combined weight for Hong Kong and China [3][9]. This summary encapsulates the key findings and insights from the conference call, providing a comprehensive overview of the current state of the emerging markets and the performance of various funds.