Active Asian Equity Funds Gain Favor Over Passive Index
Investors are shifting toward active funds to reduce risk from heavy tech concentration in passive regional indices.
Updated on Oct. 15, 2026 in Investing
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Professional fund selectors report a strong preference for active management in Asian equity portfolios as of October 15, 2026. This shift reflects concerns over the heavy concentration of technology giants in passive market indices.
Why it matters
Passive Asian equity indices rely heavily on a few tech companies, which creates significant risk for investors if those specific sectors underperform. Active management allows for broader diversification beyond the narrow concentration currently driving regional market indices.
A survey of financial professionals found 98% prefer active Asian equity funds, with 77% expecting to increase their allocations over the next three years. These managers seek to avoid risks from passive indices, where just three tech companies account for one-third of the weight.
The players
MSCI AC Asia Pacific ex-Japan Index
A benchmark equity index used to track market performance across Asian countries, excluding Japan.
TSMC
A major semiconductor manufacturing company that functions as a top-weighted constituent in regional equity indices.
Samsung Electronics
A primary technology firm with significant influence on the performance of Asian market indices.
SK Hynix
A large-scale technology manufacturer that is a key component in regional equity index weighting.
The details
Passive regional indices are heavily driven by price momentum and concentration in Taiwan and South Korea, which together represent nearly half of the MSCI AC Asia Pacific ex-Japan Index. Because three tech giants dominate these indices, passive investors are essentially tied to the performance of these specific companies. Active fund managers seek to bypass this concentration, allowing them to capture growth from companies that are currently underrepresented in standard index weightings.
Timeline
October 15, 2026: Survey results published regarding active equity preferences.
Next three years: Expected growth period for active Asian equity fund allocations.
Money Landscape
The growing shift toward active management represents a departure from the long-term trend of passive investment in index-tracking funds. This pivot highlights investor concern regarding the high concentration of specific tech companies within Asian market benchmarks.
If you hold passive Asian equity funds, review your portfolio's exposure to single-sector tech concentrations to see if your risk matches your goals. Consider discussing with a professional whether active management or further diversification aligns better with your long-term financial plans.
The takeaway
Market indices that are heavily concentrated in a few technology stocks may expose your savings to sector-specific downturns. Before adjusting your holdings, review your current fund's top ten holdings to see how much of your capital is tied to just three specific companies.
Further reading
For more on building a portfolio, see our guide to Investing.
Source note: This article includes information reported by Funds Europe.
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