HDFC Bank Becomes Most Critical Emerging-Market Bank Globally, Held by 71% of Active EM Funds
The Copley report notes that in the past six months alone, 13 new funds have initiated positions in HDFC Bank, while only one has exited
India’s HDFC Bank has cemented its stature as the most essential bank for global emerging-market (EM) investors, according to the latest findings from Copley Fund Research. As of August 28, 2025, a record 71% of actively managed EM funds include HDFC Bank in their portfolios—the highest representation in the firm’s 17-year dataset.
Record Ownership and Growing Appeal
The Copley report, highlighted by analyst Steven Holden via Smartkarma, notes that in the past six months alone, 13 new funds have initiated positions in HDFC Bank, while only one has exited, signaling exceptional investor confidence. Such level of adoption reflects the bank’s enduring appeal across active global fund managers.
Moreover, more than half of these funds continue to weight HDFC Bank over the benchmark in their portfolios—even after its inclusion in the MSCI Emerging Markets Index weakened the excess weighting.
Synergies from the HDFC Merger Drive Momentum
HDFC Bank’s growing prominence is closely tied to its July 2023 merger with Housing Development Finance Corporation (HDFC). The integration has significantly strengthened the bank’s balance sheet, broadened its retail footprint, and improved its funding profile—making it more attractive than competitors such as ICICI Bank, Mexico’s Banorte, Indonesia’s Bank Central Asia, and even China Construction Bank. For many funds pursuing an "aggressive growth" mandate, HDFC Bank has become a foundational holding. At least four global funds—Flossbach von Storch, RBC, VanEck, and Switzerland’s Amonis—currently allocate over 7% of their portfolios to the bank.
Portfolio Weight and Market Outperformance
While average portfolio weight for HDFC Bank stands at 1.78%, slightly off its peak in 2023, it remains well above historical norms. Share price performance over the past year underscores investor confidence: HDFC Bank’s stock surged nearly 20%, outpacing the MSCI EM Index and dramatically outperforming Nifty 50, which declined by around 1.5%. Beyond fund ownership trends, HDFC Bank’s merger has elevated its systemic importance in India. According to the Reserve Bank of India’s designation of Domestic Systemically Important Banks (D-SIBs), HDFC Bank was moved to a higher bucket post-merger, increasing its required capital surcharge to 0.40% from 0.20%—underscoring its critical role in financial stability.