| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.6% | -1.9% | 15.1% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 15.1% | -6.2% | 12.8% | -24.5% | 13.6% | 18.8% |
Harding Loevner's International Small Companies Equity fund declined 1.7% in Q4 2025 but gained 16.1% for the year, trailing the benchmark's 29.9% return. The fund's quality-growth approach clashed with momentum-driven markets that favored speculative themes over fundamental strength. While AI enthusiasm lifted semiconductor stocks and gold's historic run boosted mining companies, the fund's disciplined focus on companies with durable competitive advantages led to underperformance. Consumer Staples emerged as the portfolio's largest active weight, offering compelling valuations among quality companies that fell out of favor. The fund added positions in businesses like Cranswick and repurchased Rohto Pharmaceuticals when valuations became attractive. IT holdings struggled as markets questioned whether AI would disrupt consulting services, though the fund selectively added to these positions expecting them to help customers implement AI. Despite near-term headwinds, management believes quality compounders will ultimately be rewarded as momentum-driven narratives lack sustainable foundations.
Quality-growth investing focused on financially strong, well-managed companies with durable competitive advantages will outperform momentum-driven market favorites over the long term.
The fund maintains patience with quality compounders, believing that companies quietly building value will be rewarded most over the long run. They see reliable, financially strong, well-managed companies with durable competitive advantages as exciting opportunities where markets might see boring investments.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 20 2026 | 2025 Q4 | 0005.HK, 0700.HK, AAPL, BHP.AX, BP.L, GSK, HSBA.L, LLY, MARS, MC.PA, MKC, MSFT, NESN.SW, OR.PA, PAN, SANOFI, SAP.DE, SHOP.TO, VOW3.DE, WEED.TO | AI, Consumer Staples, gold, growth, international, momentum, Quality, small cap |
DIA IM CWK LN 002891 CH 4527 JP HERDEZ MM EVT GR |
The fund emphasizes quality-growth investing that demands relentless skepticism toward market narratives and constant scrutiny of company fundamentals. They focus on financially strong, well-managed companies… |
| Oct 19 2025 | 2025 Q3 | 6869 JP, AFX GR, BC8 GR | Artificial Intelligence, gold, IT Services, Medical Devices, Quality Investing |
6869 JP AFX GR MEDI NO |
The fund highlights structural growth in healthcare driven by aging populations and recurring revenues from medical equipment makers like Medistim and Sysmex. IT-services holdings faced… |
| Jul 22 2025 | 2025 Q2 | 3697 JP, 4527 JP, ATE FP, CYBR, GLOB, REY IM | growth, international, moats, small caps |
CYBR GLOB 4527 JP 3697 JP |
- |
| Mar 31 2025 | 2025 Q1 | 0MR5 LN, 3697 JP, AFX GR, ATE FP, EVT GR, LEHN SW, LEHNZ LN, MEGACPO MM, PFV GR, TOWR IJ, YOU LN | - | - | - |
| Dec 31 2024 | 2024 Q4 | 2175 JP, AFX GR, ATE FP, CEVI SS, EVO, LEHN SW, PFV GR, TOWR IJ, YOU LN | - | - | - |
| Sep 30 2024 | 2024 Q3 | 0QLN LN, 0QMR LN, CWK LN, DIA IM, EVO, LOTB BB, OGEG LN, SBS GR, SHKL | - | - | - |
| Jul 18 2024 | 2024 Q2 | BC8 GR, EVO, KWS GR, KWS LN, LZRFY, MAXF IN, RMV LN, TMRAY, YOU LN | - | - | - |
| Apr 15 2024 | 2024 Q1 | 6197 JP, EVT GR, KWS LN, PFV GR, YOU LN | - | - | - |
| Jan 31 2024 | 2023 Q4 | 4975 JP, CHYHY, CYBR, KWS LN, MEGACPO M, SMS LN, TOM NO, YOU LN | - | - | - |
| Mar 3 2023 | 2022 Q4 | 0GEG LN, CHR SW, DPH LN, GEB GR, LELA GR, TOM NO | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
GoldGold returned +65% in dollars in 2025, driven by broadening demand from central banks, professional and retail investors. Central banks now hold 24% of reserves in gold versus 23% in US Treasuries for the first time. Maintained 12% portfolio allocation throughout the year. |
Central Banks Reserves Diversification Demand | |
Momentum2025 was characterized by extreme momentum dynamics with capital flowing into immediate winners while perceived losers saw unprecedented pressure. Market leadership concentrated in lower-quality, speculative, and cyclically sensitive stocks. The momentum trade has been exceptionally profitable short-term but timing the inevitable reversal remains challenging. |
Cyclical Speculation Leadership Volatility Reversal | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
| 2025 Q3 |
CommoditiesBull market may be in early stages with most commodities 46% below nominal peaks and 73% below inflation-adjusted highs. Commodity-to-equity ratio near historic lows suggests capital starvation. Current cycle appears only one-third complete compared to historical precedent. |
Cycles Capital Valuation Equities |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
Technology |
||
| 2025 Q2 |
Growth |
|
InternationalHigh-quality international businesses trade at fractions of US multiples, with the manager positioning clients to take advantage of this divergence. Despite US equity market dominating investor mindshare, the rest of the world returned 32.6% in dollar terms in 2025 versus SPY's 17.7%. |
Discount Opportunity Outperformance Quality Positioning | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 19, 2025 | Fund Letters | Jafar Rizvi | 6869 JP | Sysmex Corporation | Health Care | Health Care Equipment | Bull | NYSE | diagnostics, Emerging markets, Installed base, Margins, Reagents, recurring revenue, visibility | Login |
| Oct 19, 2025 | Fund Letters | Jafar Rizvi | AFX GR | Carl Zeiss Meditec AG | Health Care | Health Care Equipment | Bull | - | Demographics, Installed base, margin normalization, Ophthalmology, Premium iols, Recurring mix | Login |
| Oct 19, 2025 | Fund Letters | Jafar Rizvi | MEDI NO | Medistim ASA | Other | Health Care Equipment | Bull | NYSE | Cardio surgery, Disposables, Free Cash Flow, Procedures, Sales expansion, TAM, Utilization | Login |
| Jul 22, 2025 | Fund Letters | Jafar Rizvi | CYBR | CyberArk Software Ltd. | Information Technology | Systems Software | Bull | NASDAQ | AI, cybersecurity, Identity, Recurring, Regulation, Software | Login |
| Jul 22, 2025 | Fund Letters | Jafar Rizvi | GLOB | Globant S.A. | Information Technology | IT Consulting & Other Services | Bull | New York Stock Exchange | AI, Consulting, Digital, growth, Platforms, Subscription | Login |
| Jul 22, 2025 | Fund Letters | Jafar Rizvi | 4527 JP | Rohto Pharmaceutical Co., Ltd. | Consumer Staples | Personal Products | Bull | New York Stock Exchange | AI, consumer, eyecare, healthcare, innovation, manufacturing | Login |
| Jul 22, 2025 | Fund Letters | Jafar Rizvi | 3697 JP | SHIFT Inc. | Information Technology | Application Software | Bull | New York Stock Exchange | AI, Japan, Quality, services, Software, Testing | Login |
| Jan 20, 2026 | Fund Letters | Jafar Rizvi | DIA IM | DiaSorin S.p.A. | Health Care | Health Care Equipment | Bear | Borsa Istanbul | Barriers, cashflow, Consumables, diagnostics, Margins, Regulation, Testkits | Login |
| Jan 20, 2026 | Fund Letters | Jafar Rizvi | CWK LN | Cranswick plc | Consumer Staples | Packaged Foods & Meats | Bull | New York Stock Exchange | Animalwelfare, CapEx, consolidation, Margins, Pricing, Regulation, scale, Supply | Login |
| Jan 20, 2026 | Fund Letters | Jafar Rizvi | 002891 CH | Yantai China Pet Foods Co., Ltd. | Consumer Staples | Packaged Foods & Meats | Bull | Shenzhen Stock Exchange | Certifications, Exports, Foodsafety, Labor, Petfood, Share, Supplychain | Login |
| Jan 20, 2026 | Fund Letters | Jafar Rizvi | 4527 JP | Rohto Pharmaceutical Co., Ltd. | Consumer Staples | Personal Products | Bull | New York Stock Exchange | Demand, expansion, eyecare, Normalization, premiumization, Skincare, supplements | Login |
| Jan 20, 2026 | Fund Letters | Jafar Rizvi | HERDEZ MM | Grupo Herdez, S.A.B. de C.V. | Consumer Staples | Packaged Foods & Meats | Bull | New York Stock Exchange | buybacks, Capitalallocation, divestiture, Food, Margins, spinoff, Streamline | Login |
| Jan 20, 2026 | Fund Letters | Jafar Rizvi | EVT GR | Evotec SE | Health Care | Life Sciences Tools & Services | Bear | Xetra | biopharma, Cycles, Outsourcing, Partnerships, profitability, R&D, spending | Login |
| TICKER | COMMENTARY |
|---|---|
| 0700.HK | Shinya also visited Shenzhen, where Star Magnolia Capital organized an educational visit for our families to Tencent's headquarters, alongside meetings with several promising early-stage companies. |
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| BHP.AX | BHP delivered +7% performance as copper and gold positions continued to make a meaningful contribution to performance, supported by higher commodity prices. |
| GSK | Glaxo is one of the world's leading pharmaceutical companies. Its share price has been stagnant for years despite solid earnings growth, and on 10x earnings, it excites us. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| MC.PA | Top gainers among the Fund's holdings included LVMH (+24%) |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| NESN.SW | We see now as an opportune time to own a company that possesses world-leading brands in consumer categories we believe have a favourable growth outlook in the long run. Nestlé's comprehensive pricing architecture through umbrella brands Nescafé and Nespresso means the portfolio should be well-positioned to capture spending shifts up and down the price ladder. In pet foods, Nestlé also possesses category leaders in its Purina line. We see both coffee and pet care as attractive categories that are more experiential and less commoditised relative to other staples. Over recent quarters, Nestlé was able to deliver positive volume growth in coffee despite pushing through high-single-digit percentage price increases. Scale matters as Nestlé is the world's largest provider of packaged coffee and among the top pet food producers globally. |
| OR.PA | In 2024, it seemed to us that other investors were unduly focused on a slowdown in consumer spending in China, an important market for L'Oréal yet contributing only 17% of its sales. L'Oréal is a broad, balanced business such that in any given year, faster-growing parts of the world will typically offset the weaker ones. We saw this in 2025, where strength in markets such as Europe, the Middle East and South America offset sluggish markets in China and the US, allowing L'Oréal to deliver a year of solid earnings growth. |
| SAP.DE | Germany-based global software developer for business applications |
| SHOP.TO | Non dividend paying technology names Shopify and Celestica had also meaningful contribution to the index returns for the year, detracting our relative outcome. |
| VOW3.DE | The two next largest contributors were Vossloh AG and Costain Group Plc, contributing 2.2% each. Both saw significant improvements in market perception relating to upcoming infrastructure spending in Germany and the UK, and their position sizes have been reduced since the valuations increased. |
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