Liontrust Tech Fund Doubles China Allocation to 11%, Adding to Alibaba and Tencent Positions Against the Trend
Alina Collins
UK-based Liontrust Global Technology Fund has doubled its China weighting to 11%, buying Alibaba, Tencent and domestic chip-equipment names while trimming U.S. chip stocks like Micron — a top-decile fund is betting the market has badly mispriced China's AI application layer.
A fund that beats 90% of peers — why is it going contrarian on China?
Liontrust Global Technology Fund has more than doubled its China exposure to 11% since late last year, adding positions including Alibaba.
Morningstar data shows the fund ranks in the top 10% of peers both year-to-date and over the past five years.
This means → this is not a speculative bottom-fish; a consistently top-performing fund is making a deliberate, system-level bet on China tech.
On the other side of the trade, the fund trimmed Micron Technology and Lumentum Holdings — U.S. tech names that had already run up significantly.
Global money is chasing AI winners elsewhere — so why go the other way?
The index tracking major China tech stocks listed in Hong Kong is down 17% year-to-date, while the MSCI global peer benchmark is up 32%.
Alibaba and Tencent shares hover near one-year lows; investors question whether earnings can justify massive AI spending.
In plain terms = global capital is piling into U.S. AI winners and ignoring China tech — Liontrust sees exactly that neglect as the buying opportunity.
What is their core thesis — and what does the "wall of demand" mean?
Fund manager Storm Uru argues China's AI cloud market is not a "zero-sum game" between private and state-backed providers.
His words: "There is a wall of demand that requires more players to supply compute."
In plain terms = AI's appetite for compute is growing so fast that the market is big enough for both private and state-owned players to thrive — it is not one side's gain at the other's expense.
The managers see Alibaba and Tencent occupying a position in China's AI application layer analogous to Anthropic and OpenAI in the U.S. — best placed to "capture the largest share of the economic value."
How do they split the AI opportunity between the U.S. and China?
The managers divide global AI investing along two dimensions: the U.S. leads in frontier models, while China's edge is in AI systems that operate in the physical world.
Since DeepSeek's R1 model launch in early 2025 rattled markets, "usable products at low prices" has become China tech's defining label, in their view.
They call agentic AI — AI systems that autonomously execute multi-step tasks — a "killer use case" that can meaningfully lift Chinese internet companies' return on investment.
This means → they are not betting China catches up on frontier large models; the wager is that China deploys AI into real-world applications faster and cheaper.
What did they buy on the hardware side, and what is the valuation logic?
New position in Eoptolink Technology (Shenzhen-listed, supplies optical transceivers to Nvidia) — trading at roughly 36× forward earnings, below rival Coherent Corp at 47×.
New position in Advanced Micro-Fabrication Equipment (AMEC), whose stock has already doubled year-to-date; the managers believe the market still underestimates the pace of China's domestic chip-equipment supply chain.
The fund also holds chip-equipment maker Piotech and lidar sensor manufacturer Hesai Group.
This reflects a China playbook that goes beyond internet platforms — Liontrust is betting along two parallel tracks: AI application layer + hardware supply chain.
Content is for reference only, not financial advice.