| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 5.92% | 19.54% | 20.04% |
Baron Emerging Markets Fund returned 19.61% in Q2 2026, underperforming the MSCI Emerging Markets Index's 24.05% return in a quarter dominated by semiconductor and AI-related shares. The delta is attributed to emphasis on innovative technology companies and lack of legacy commodity semiconductor exposure. Key catalysts included the Iran cease-fire reopening the Strait of Hormuz and rapid adoption of agentic AI from Anthropic and OpenAI, enabling the leap from chatbots to fully autonomous AI agents. Top contributors were SK hynix, TSMC, and Samsung, all benefiting from supply-constrained HBM markets and record memory profitability. Detractors included Alibaba, which ramped AI infrastructure investment, and BYD, facing domestic EV price competition. The manager initiated positions in Indian pharmaceutical companies Divi's and Acutaas as supply chain diversification beneficiaries, Saudi digital insurance platform Rasan, and Hungarian bank OTP. Despite near-term AI concentration risks and poor market breadth, the manager remains optimistic about their theme-driven approach, viewing current valuations in digitization beneficiaries as attractive opportunities. The Fund maintains market weight semiconductor exposure while opportunistically adding to mispriced quality growth names.
Baron Emerging Markets Fund pursues a fundamental, theme-driven, bottom-up approach focused on quality growth companies in emerging markets, with particular emphasis on innovative technology leaders in semiconductors and AI, supply chain diversification beneficiaries in India, and structural growth opportunities across digitization themes.
The manager remains optimistic that their fundamental, theme-driven and bottom-up approach can continue to deliver solid results against a backdrop of dynamic change and opportunity. They would welcome a pause in AI enthusiasm as it has crowded out many other attractive industries and stocks, particularly digitization beneficiaries that have been sold down to valuations that belie decades of entrenched advantages. The manager is encouraged by India holdings entering early innings of an earnings upgrade cycle and maintains conviction in semiconductor holdings despite near-term volatility. While confident that AI innovation will ultimately lead to many large-scale applications ensuring all capacity additions will be absorbed, the manager acknowledges near-term risk that capital markets may pause in allocating to more speculative or less competitive players in the AI ecosystem.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 28 2026 | 2026 Q2 | 000660 KS, 005930 KS, 0268 HK, 0700.HK, 1211 HK, 300750.SZ, 688008.SS, BABA, DIVISLAB.NS, GDS, GMEXICO.MX, NU, OTP.BD, PONY, POWERGRID.NS, TSM | AI, China, emerging markets, Geopolitical Risk, India, semiconductors, technology | - | Baron Emerging Markets Fund returned 19.61% in Q2 2026, trailing the benchmark's 24.05% in a semiconductor-dominated quarter. Agentic AI adoption and Iran cease-fire drove returns concentrated in mega-cap memory leaders SK hynix, TSMC, and Samsung. The manager added Indian pharma supply chain plays and maintains conviction in quality growth despite AI concentration risks, viewing digitization beneficiaries as mispriced opportunities after market rotation toward legacy semiconductor names. |
| Apr 25 2026 | 2026 Q1 | 005930 KS, 2359.HK, 700 HK, BAJFINANCE.NS, BHARTIARTL.NS, TSM | AI, China, defense, emerging markets, energy, Geopolitical, India, Korea, semiconductors, Taiwan | - | Baron Emerging Markets outperformed in volatile Q1 2026 despite Iran war disruption. AI semiconductor holdings led gains while new positions in energy, biotech, and beauty themes were added opportunistically. Manager maintains conviction in EM structural advantages from AI demand, supply chain diversification, and dollar weakness, viewing recent geopolitical volatility as attractive entry opportunity for long-term investors. |
| Jan 27 2026 | 2025 Q4 | 000660.KS, 005930.KS, 0700.HK, 1024.HK, 300750.SZ, BABA, BAJFINANCE.NS, BAP, BEL.NS, BHARTIARTL.NS, HDFCBANK.NS, NU, RELIANCE.NS, SQM, TSM, ZLAB | AI, Banking, China, emerging markets, geopolitics, India, semiconductors, technology |
TSM 000660 KS 005930 KS BABA ABG SJ FSR SJ NU |
Baron Emerging Markets Fund gained 30% in 2025 despite Q4 weakness, with the manager viewing this as the start of sustainable EM outperformance. Strong semiconductor and AI exposure drove returns while China volatility created headwinds. Large India overweight positions for earnings recovery while new banking investments target favorable credit cycles in South Africa and Latin America. |
| Oct 28 2025 | 2025 Q3 | 002050.SZ, 0268.HK, 0700.HK, 1024.HK, 2308.TW, 300750.SZ, 601100.SS, 601865.SS, BABA, BEL.NS, BHARTIARTL.NS, GDS, INPST.L, MAXHEALTH.NS, PONY, SQM, SWIGGY.NS, TRENT.NS, TSM, XPEV | AI, China, Data centers, Electric Vehicles, emerging markets, India, semiconductors, technology | - | Baron Emerging Markets Fund outperformed in Q3 as Chinese equities surged on AI recognition while Indian markets stalled. The manager maintains high conviction in China's emerging AI ecosystem and India's approaching earnings upgrade cycle. Key themes include AI infrastructure, semiconductors, and electric vehicles. Global central bank easing and continued AI investment provide supportive backdrop for emerging market outperformance. |
| Aug 11 2025 | 2025 Q2 | 0700.HK, 1211.HK, 300750.SZ, 3690.HK, 3988.HK, 9988.HK, BABA, BAJFINANCE.NS, BAP, BHARTIARTL.NS, JIOFINANCE.NS, JMFINANCIL.NS, KOTAKBANK.NS, MAXHEALTH.NS, NUVAMA.NS, PONY, RELIANCE.NS, TRENT.NS, TSM, XP | AI, China, defense, emerging markets, India, Korea, semiconductors, Shipbuilding | - | Baron Emerging Markets Fund outperformed by 340bp in Q2 2025 as Korean shipbuilding/defense companies drove returns amid geopolitical tailwinds. TSMC benefited from AI chip demand while Indian holdings recovered on economic stimulus. Chinese positions consolidated gains, prompting reduced exposure. Manager expects continued EM outperformance driven by dollar weakness and shifting capital flows away from U.S. assets. |
| Mar 31 2025 | 2025 Q1 | 009540.KS, 0268.HK, 0700.HK, 1211.HK, 300750.SZ, 3690.HK, 8069.TW, BABA, BAJFINANCE.NS, BEKE, BHARTIARTL.NS, CHOLAFIN.NS, CUMMINSIND.NS, GFI, INDIGO.NS, JMFINANCIL.NS, KAYNES.NS, KOTAKBANK.NS, MELI, SWIGGY.NS, TRENT.NS, TSM, XPEV, YMM | China, Digitization, Dollar, Electric Vehicles, emerging markets, India, tariffs, Trade Policy | - | Fund outperformed amid trade policy uncertainty, benefiting from China digitization and EV themes while India corrected then recovered. Manager sees U.S. economic nationalism as paradigm shift favoring non-dollar assets long-term. Portfolio emphasizes domestic growth companies over exporters, with India overweight positioned as trade war winner given minimal U.S. exposure. |
| Dec 31 2024 | 2024 Q4 | 005380.KS, 009540.KS, 0700.HK, 300750.SZ, BABA, BAJFINANCE.NS, BHARTIARTL.NS, HDFCBANK.NS, INPST.L, JD, MELI, RENT3.SA, SBIN.NS, TRENT.NS, TSM, YMM | China, E-Commerce, emerging markets, India, Korea, semiconductors, Shipbuilding | - | Baron Emerging Markets Fund outperformed benchmark in Q4 despite 7.35% decline, driven by strong Korea shipbuilding and semiconductor selection. Post-election dollar rally pushed EM valuations to 20-year lows, creating attractive entry point. China stimulus measures and India structural growth provide fundamental support. Manager added digitization positions while maintaining conviction in quality growth companies across emerging markets. |
| Sep 30 2024 | 2024 Q3 | 000660.KS, 005930.KS, 009540.KS, 043370.KS, 0700.HK, 207940.KS, 300750.SZ, 3690.HK, 8069.TW, BABA, BHARTIARTL.NS, INPST, JMFINANCIL.NS, NUVAMA.NS, PDD, RELIANCE.NS, SBILIFE.NS, TRENT.NS, TSM, WMMVY | Biotechnology, China, E-Commerce, emerging markets, Energy Transition, Fed Easing, India, semiconductors |
9988.HK SWIGGY.NS TRENT.NS 3690.HK 8069.TW 300750.SZ 207940.KS 131390.KS |
Emerging markets are entering a sustainable outperformance cycle as three catalysts converge: Fed easing, Japanese yen normalization, and comprehensive Chinese stimulus. The fund outperformed in Q3 through strong stock selection in India and sustainability themes, while adding high-conviction positions in Chinese e-commerce, battery technology, and biotechnology. Valuations remain attractive despite recent rallies. |
| Jul 27 2024 | 2024 Q2 | 005930.KS, 009540.KS, 0700.HK, 4966.TW, BABA, BDO.PS, BHARTIARTL.NS, BKRKY, CUMMINSIND.NS, INDUSTOWER.NS, PDD, POWERGRID.NS, RELIANCE.NS, RENT3.SA, SRF.NS, SUZ.SA, TRENT.NS, TSM, WEGE3.SA, XP | AI, China, emerging markets, Fed policy, India, semiconductors, Valuations |
TSM 0700.HK 009540.KS POWERGRID.NS CUMMINSIND.NS SRF.NS WEGE3.SA 4966.TW |
Baron Emerging Markets Fund sees attractive long-term entry point in EM equities with valuations near multi-decade lows. Key drivers include AI broadening to edge applications benefiting hardware ecosystem, semiconductor recovery, and India's investment cycle. Expects Fed easing to favor EM over Magnificent Seven. Added supply chain and digitization exposure while reducing Latin America positions due to political risks. |
| Apr 15 2024 | 2024 Q1 | 0027.HK, 005930.KS, 006400.KS, 0700.HK, 105560.KS, 2313.HK, 2319.HK, 300760.SZ, BABA, BHARTIARTL.NS, HDFCBANK.NS, INDIGO.NS, NU, PDD, RELIANCE.NS, RENT3.SA, SUZB3.SA, TME, TSM, XP, ZLAB | China, Digitization, emerging markets, Fed policy, Fintech, India, Rate Cuts, semiconductors | - | Baron Emerging Markets Fund sees an inflection point for EM outperformance driven by Fed rate cuts and global easing. Strong semiconductor and fintech holdings led Q1 gains, with Taiwan Semiconductor and Nu Holdings as top contributors. The fund maintains overweight India and Brazil exposure while adding digitization plays, positioning for secular growth despite near-term China headwinds. |
| Jan 27 2024 | 2023 Q4 | 000858.KS, 005930.KS, 0700.HK, 1876.HK, B3SA3.SA, BABA, BAJFINANCE.NS, BHARTIARTL.NS, BIDU, HDFCBANK.NS, NU, PDD, RENT3.SA, RI.PA, SUZB3.SA, TRENT.NS, TSM, XP, YUMC | China, E-Commerce, emerging markets, Fed policy, Fintech, India, Rate Cuts, semiconductors |
AIR FP|ICLR|LIN|MRVL|NOW|TSM 005930.KS TRENT.NS PDD KAYNES.NS |
Baron Emerging Markets Fund sees the Fed's rate cut pivot as the catalyst for a multi-year EM outperformance cycle, ending the 14-year dollar bull market. The fund reduced China exposure while maintaining India as its largest overweight, positioning for domestic growth beneficiaries in rate-sensitive markets. Quality growth portfolio remains well-positioned despite near-term consolidation risks. |
| Sep 30 2023 | 2023 Q3 | 000333.SZ, 005930.KS, 0700.HK, 2313.HK, 600519.SS, BABA, BAJFINANCE.NS, BBRI.JK, BIDU, BZ, HDFCBANK.NS, M&M.NS, NU, SUZB3.SA, TATACOMM.NS, TRENT.NS, TSM, WALMEX.MX | China, emerging markets, Fintech, India, semiconductors, technology, value |
AIR FP|ICLR|LIN|MRVL|NOW|TSM 005930.KS 000700.HK SUZB3.SA TATACOMM.NS 600519.SS MAHM.NS ARGX BB|DAVA|DDOG|GLOB|ILMN|LOAR|MELI|NET|NU|NVDA|TSM |
Baron Emerging Markets Fund underperformed in Q3 as rising U.S. bond yields pressured growth stocks globally. China holdings detracted on economic concerns while India outperformed. The manager believes peak U.S. hawkishness will trigger demand destruction, creating favorable conditions for emerging market outperformance as non-U.S. central banks begin easing cycles ahead of the Fed. |
| Dec 31 2022 | 2022 Q4 | 268 HK, 587 HK, BAF IN, HAPVY, NHU SS, SMSN LN, TCEHY, TS, TSM | - | - | |
| Sep 30 2022 | 2022 Q3 | 002271 CH, 002747 CH, BAF IN, BHARTI IN, BIDU, CPNG, TCEHY, TSM | - | - | |
| Jun 30 2022 | 2022 Q2 | 002747 CH, 1880 HK, 600519 CH, 601100 CH, CPNG, TSM, YMM | - | - | |
| Mar 31 2022 | 2022 Q1 | 047810 KS, 1299 HK, BAP, BIDU, GLEN LN, TCEHY | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe rapid adoption of Anthropic's Claude Cowork and OpenAI's GPT 5.5/Codex enabled the leap from chatbot/reasoning to fully agentic AI, driving strong returns in semiconductor and AI-related shares. Agentic AI software coding and task management achieved unprecedented productivity, with Anthropic capturing 60% of total AI revenue. However, concerns emerged about commoditization of other LLMs and whether hyperscaler capex commitments have clear monetization paths. |
Agentic AI LLM Anthropic OpenAI Hyperscaler |
SemiconductorsSemiconductor stocks dominated returns with the IT sector contributing roughly 90% of Q2 index performance. SK hynix demonstrated supply-constrained HBM markets with customers pre-booking over three years of supply. TSMC's leading-edge manufacturing monopoly and Samsung's HBM4 leadership drove record profitability. The manager maintains market weight exposure despite late-quarter profit taking on concerns about speculative players. |
HBM Memory Foundries AI Chips TSMC | |
IndiaIndia holdings are entering early innings of an earnings upgrade cycle as West Asia conflict risks recede and government fiscal reforms plus monetary stimulus return the world's fastest growing major economy to trend. The manager added positions in pharmaceuticals (Divi's, Acutaas) benefiting from supply chain diversification and maintains conviction despite recent underperformance due to lack of semiconductor ecosystem. |
Earnings Upgrade Fiscal Reform Pharma Supply Chain | |
E-commerceAlibaba reported lower profitability and negative free cash flow as the company ramped AI infrastructure investment, with capex now exceeding prior three-year budgets. Persistent weakness in Chinese consumption and intensifying competition weighed on core retail, though cloud revenue growth accelerated. The manager views Alibaba as well-positioned for China's AI supply chain despite near-term earnings reset. |
China Cloud AI Infrastructure Consumption | |
Electric VehiclesBYD faced headwinds from ongoing price competition and weak consumer demand in China's domestic new energy vehicle market, with reduced national purchase incentives adding pressure. However, international business remained strong with overseas deliveries up over 80% year-over-year and accounting for over 40% of volume. The manager maintains the position based on cost leadership, vertical integration, and export growth. |
BYD China Export Price Competition | |
OnshoringThe manager initiated positions in Divi's Laboratories and Acutaas Chemicals as beneficiaries of global pharmaceutical supply chain realignment away from China. Both companies have been onboarded into the GLP-1 value chain and are expanding capacity. Acutaas holds 50-90% market share in critical intermediates and is ramping CDMO segments with global innovators. |
Pharma Supply Chain India GLP1 | |
Geopolitical RiskThe Iran cease-fire and MOU to reopen the Strait of Hormuz was a key catalyst, though the manager cautions that wide gaps in expectations between parties suggest risk premium and oil prices may not fall as anticipated. President Trump declared the cease-fire no longer in effect, leaving tail risk scenarios in place with Iran maintaining control over the Strait and resources to support regional proxies. |
Iran Oil Strait of Hormuz Tail Risk | |
DigitizationThe manager initiated a position in Rasan Information Technology, the leading digital insurance marketplace in Saudi Arabia, benefiting from Vision 2030 initiatives modernizing the insurance industry. The company has built a durable competitive advantage through deep integration with insurers and regulators. Digitization beneficiaries like e-commerce, fintech, and software have been sold down to valuations that belie decades of entrenched advantages. |
Saudi Arabia InsurTech Vision 2030 Marketplace | |
| 2026 Q1 |
AIAI infrastructure demand is driving significant growth for semiconductor companies, particularly in memory and leading-edge logic. The emergence of agentic AI and multi-modal applications has enhanced visibility of compute demand, benefiting EM companies that supply critical enabling technologies. |
Semiconductors Memory Infrastructure Computing Chips |
SemiconductorsAdvanced semiconductor companies, particularly those in Taiwan and Korea, are benefiting from AI-driven demand and supply constraints in critical infrastructure. The fund holds multiple positions across the semiconductor value chain from foundries to testing equipment. |
Foundries Memory Testing Manufacturing Technology | |
DefenseGlobal security concerns and supply chain diversification are driving investment in defense-related companies. The fund has positions in Korean defense contractors that benefit from expanding defense budgets and export opportunities. |
Security Supply Chain Diversification Equipment Spending | |
EnergyThe Iran war has created volatility in energy markets with oil price spikes. The fund initiated positions in energy producers in Argentina and Brazil, viewing current valuations as attractive despite geopolitical risks. |
Oil Production Geopolitical Volatility Producers | |
BiotechnologyThe fund initiated a position in WuXi AppTec, viewing it as entering a multi-year earnings up-cycle driven by the obesity drug super-cycle and recovering biotech funding. Geopolitical risks from the BIOSECURE Act are seen as ebbing. |
CRDMO Drug Development Manufacturing Obesity GLP1 | |
BeautyInvestment in Korean premium skincare brand d'Alba represents exposure to the K-Beauty trend with global expansion potential. The company has built a cohesive brand identity supporting premium pricing and high repurchase rates. |
Skincare Korea Premium Global Brand | |
| 2025 Q4 |
AIThe fund extensively analyzes whether current AI markets represent a bubble, comparing it to the late 1990s internet bubble. They question AI equipment depreciation schedules, datacenter power demands, and whether promised returns will materialize, while noting the market's shift in viewing Google from AI laggard to leader. |
Artificial Intelligence Bubble Valuations Infrastructure Technology |
Long/ShortThe fund operates a global long/short strategy targeting risk-adjusted returns with a diversified short book to reduce risk and enable profits in tough markets. The short book remained a headwind this quarter, particularly in Biotech and Materials sectors. |
Hedge Fund Short Selling Risk Management Diversification | |
BiotechnologyThe short book faced headwinds particularly within the Biotech sector this quarter. The fund also discusses biotech companies that go public via reverse mergers and spend capital on stock promotion rather than lab research as potential short opportunities. |
Biotech Short Positions Reverse Mergers Stock Promotion | |
| 2025 Q3 |
AIChina is emerging as a major rival to the U.S. AI ecosystem, with Chinese companies leading in open-source large language models and achieving performance comparable to top U.S. models at lower computing costs. China possesses structural advantages including the world's largest digital population for training data, half the world's AI researchers, massive power capacity additions, and cost-effective infrastructure development. |
Data Centers Cloud Semiconductors GPUs Machine Learning |
ChinaChinese equities led global gains in Q3 and are up over 40% year-to-date as global investors recognize China's AI potential and leadership in electric vehicles, batteries, autonomous mobility, and renewable energy. The manager sees improving bottom-up opportunities and expects fundamental investors to generate solid returns despite longer-term structural headwinds. |
Technology Electric Vehicles Semiconductors E-commerce Cloud | |
Electric VehiclesChina demonstrates leadership in new age technologies including electric vehicles and batteries, with the manager investing across the EV ecosystem from battery manufacturers to autonomous mobility companies. The portfolio includes exposure to EV battery technology and companies positioned to benefit from the emergence of robotaxi services. |
Battery Supply Chain Autonomous Vehicles Energy Storage Lithium Manufacturing | |
SemiconductorsThe portfolio includes exposure to semiconductor companies across Taiwan and Korea, from large-cap global players like TSMC to smaller specialized plays. Taiwan and Korea offer attractive investment candidates in the AI semiconductor ecosystem, with TSMC benefiting from robust AI chip demand and technological leadership in cutting-edge GPUs. |
AI GPUs Foundries Memory Chip Designers | |
Data CentersChina is in early innings of scaling its AI ecosystem with rising cloud computing penetration, providing secular growth tailwinds for data center operators. The manager invested in GDS Holdings, which operates mission-critical data center facilities with competitive advantages including access to large-scale power in Tier-1 cities and leading market share in third-party carrier-neutral space. |
Cloud AI Infrastructure Power Real Estate | |
IndiaDespite recent underperformance, the manager maintains high conviction in India's structural growth story and believes the market is entering an earnings upgrade cycle. Catalysts include government infrastructure spending rebound, tax relief, benign inflation, normal monsoon improving rural demand, and GST 2.0 rollout expected to boost consumption. |
Infrastructure Spending Tax Policy Consumer Finance Healthcare Defense | |
| 2025 Q2 |
DefenseKorean defense companies are benefiting from geopolitical tailwinds and increased collaboration with the U.S. Navy. Companies like Hanwha Systems and Korea Aerospace Industries are positioned to benefit from shifting geopolitical priorities and EU/Asia/U.S. defense spending. |
Defense Spending Geopolitical Naval Military Korea |
ShipbuildingKorean shipbuilders HD Korea Shipbuilding and HD Hyundai Heavy Industries are entering a multi-year growth cycle with attractive profitability metrics. They benefit from improving profit margin visibility, backlog growth, and opportunities in naval and defense business. |
Shipbuilding Naval Defense Korea Backlog | |
NuclearDoosan Enerbility is positioned to benefit from a global nuclear power upcycle driven by AI datacenter power requirements, industrial decarbonization, and rising demand for nuclear energy as a strategic asset amid geopolitical tensions. |
Nuclear Power Equipment AI Data Centers Energy | |
AIMultiple investments benefit from AI trends including TSMC's exposure to AI chips, Doosan's nuclear power for AI datacenters, and Chinese companies like Alibaba pursuing Artificial General Intelligence and ramping cloud infrastructure for AI capabilities. |
Artificial Intelligence Semiconductors Cloud Data Centers Technology | |
SemiconductorsTSMC contributed strongly due to robust demand for AI chips and easing tariff concerns. The company maintains technological leadership, pricing power, and exposure to secular growth markets including AI, automotive, 5G, and Internet of Things. |
Semiconductor Cycle AI Technology Taiwan Manufacturing | |
E-commerceChinese e-commerce platforms like Alibaba and Meituan face competitive pressures but remain positioned for long-term growth. Alibaba benefits from China's ongoing e-commerce growth while Meituan dominates food delivery despite subsidy wars. |
E-commerce Digital Platforms China Food Delivery Technology | |
Electric VehiclesEV-related investments include battery manufacturer CATL, EV component supplier Sanhua Intelligent Controls serving Tesla, and autonomous driving leader Pony.ai positioned for China's emerging robotaxi market. |
Electric Vehicles Battery Supply Chain Autonomous Driving China Technology | |
IndiaIndia represents the highest conviction and largest country weighting with attractive secular growth, economic reforms, and digitization catalysts. Holdings benefit from improving economic growth driven by infrastructure spending, tax cuts, and monetary stimulus. |
India Economic Growth Digitization Infrastructure Spending Reforms | |
| 2025 Q1 |
Electric VehiclesAdded positions in Chinese EV manufacturers BYD and XPeng. BYD leads with 35% domestic market share and vertical integration including battery production. XPeng distinguished by advanced driver-assistance systems and autonomous driving technology. Both positioned to benefit from China's EV adoption exceeding 50% penetration. |
BYD XPeng Autonomous Driving Battery China |
ChinaStrong stock selection in China was the largest contributor to relative performance. Added positions across multiple Chinese companies including EV manufacturers, software providers, and real estate platforms. Early signs of economic stabilization, particularly in property sector, improving forward-looking earnings outlook. |
Economic Stabilization Property Software ERP Real Estate | |
DigitizationBenefited from digitization theme through Full Truck Alliance and established new position in KE Holdings, China's leading housing transaction platform. Kingdee International Software Group, a leading ERP provider, was a standout contributor positioned to benefit from China's digital transformation and software localization. |
ERP Software Digital Transformation Platform Localization | |
IndiaLarge overweight position in India experienced correction but began recovering. India positioned as relative winner in trade war given domestic consumer-driven economy with low global trade share. Goods exported to US account for only 2% of GDP. Expected to benefit from deflationary impact of global slowdown on commodity imports. |
Domestic Consumption Trade War Consumer Finance Banking GDP Growth | |
Trade PolicyUS initiated trade war against rest of world, potentially signaling withdrawal from global trade compact. This paradigm shift could elevate risk premium initially but may lead to outperformance of non-dollar assets. Economic nationalism and protectionism moving to center stage, creating uncertainty around global trade equilibrium. |
Tariffs Protectionism Economic Nationalism Trade War Dollar Weakness | |
| 2024 Q4 |
SemiconductorsFund maintains significant exposure to semiconductor leaders like TSMC, benefiting from cyclical recovery and AI chip demand. Taiwan and Korea constituents are strategically positioned for accelerating growth in AI, advanced computing, and leading-edge semiconductor manufacturing. |
AI TSMC Memory Foundries Taiwan |
ShipbuildingKorean shipbuilding holdings HD Korea Shipbuilding and HD Hyundai Heavy are entering multi-year growth cycle with attractive profitability. Companies benefit from decarbonization trends driving demand for LNG and carbon-free vessels, plus geopolitical tailwinds creating defense opportunities. |
LNG Defense Korea Decarbonization Maritime | |
E-commerceAdded positions in MercadoLibre and SF Holding to capitalize on digitization trends. MercadoLibre dominates Latin American digital commerce with comprehensive fintech ecosystem, while SF leads Asian logistics with premium express delivery capabilities. |
Logistics FinTech Latin America Asia Digital Commerce | |
IndiaIndia continues productivity-enhancing reforms kickstarting virtuous investment cycle, positioning as fastest growing large economy. Fund maintains overweight with focus on digitization leaders like Bharti Airtel and quality companies benefiting from Make in India initiatives. |
Digitization Manufacturing Growth Telecom Electronics | |
ChinaPolicy pivot in September marks key inflection point with extensive stimulus measures including RMB 10 trillion debt swap program and more accommodative regulatory environment. Manager expects broadening rally to benefit private sector growth stocks despite property sector challenges. |
Stimulus Policy Property Private Sector Regulation | |
| 2024 Q3 |
E-commerceThe fund holds major positions in Chinese e-commerce leaders Alibaba and Meituan, as well as Indian food delivery platform Swiggy. These companies benefit from growing online commerce penetration, improving profitability, and strong competitive positioning in their respective markets. |
Food delivery Online commerce Digital platforms Market share Profitability |
SemiconductorsThe fund maintains significant exposure to semiconductor companies including Taiwan Semiconductor, Samsung Electronics, and SK hynix. The manager sees long-term growth driven by AI demand, memory cycles, and advanced packaging technologies like high-bandwidth memory. |
Memory AI demand Foundries Semiconductor testing Advanced packaging | |
Energy TransitionThe fund added Contemporary Amperex Technology (CATL), the world's largest EV battery manufacturer, to capitalize on electric vehicle adoption and energy storage growth. CATL has technology leadership in superfast charging and strong pricing power. |
EV batteries Energy storage Electric vehicles Battery technology Superfast charging | |
BiotechnologyThe fund initiated a position in Samsung Biologics, a leading contract development and manufacturing organization serving global pharmaceutical companies. The company benefits from industry outsourcing trends and capacity expansion amid supply constraints. |
CDMO Biopharmaceutical Contract manufacturing Capacity expansion Outsourcing | |
IndiaIndia represents the fund's largest country allocation at 30.9% and offers the most attractive long-term opportunities. Holdings include wealth management, consumer finance, retail, and telecom companies benefiting from the growing middle class and digital adoption. |
Wealth management Consumer finance Retail expansion Digital adoption Middle class growth | |
| 2024 Q2 |
AIAI enthusiasm has broadened from GPU/data center arms race to edge AI applications on servers, PCs, and handsets, driving demand for hardware replacement cycles. Many EM companies benefit from this transition, including semiconductor and hardware ecosystem players. The fund sees potential for market leadership changes as AI moves from training to inference phases. |
Edge AI Semiconductors Hardware Servers Handsets |
SemiconductorsStrong cyclical recovery expected in semiconductors with significant incremental demand for AI chips. TSMC maintains technological leadership and pricing power with exposure to secular growth markets including high-performance computing, automotive, 5G, and IoT. The fund expects sustained double-digit earnings growth over the next several years. |
TSMC AI Chips Foundries Memory Cyclical Recovery | |
IndiaIndia has become a standout investment destination within emerging markets and entered a multi-year virtuous investment cycle. The fund is encouraged by Prime Minister Modi's reelection to a historic third term, supporting policy continuity and further productivity-enhancing economic reforms. Strong digitization and infrastructure investments continue. |
Modi Digitization Infrastructure Policy Continuity Economic Reforms | |
Energy TransitionKorean shipbuilders benefit from tightening carbon emission regulations that will be fully adopted by the International Maritime Organization by 2030. This drives higher demand for LNG dual-fueled ships and carbon-free ammonia-fueled ships. A structural shortage of compliant ships is expected to emerge as the IMO deadline nears. |
LNG Ships Carbon Emissions IMO Regulations Shipbuilding Green Shipping | |
| 2024 Q1 |
SemiconductorsTaiwan Semiconductor Manufacturing Company Limited contributed significantly due to investor expectations for continued strong cyclical recovery in semiconductors and significant incremental demand for AI chips. The company's technological leadership, pricing power, and exposure to secular growth markets including high-performance computing, automotive, 5G, and IoT will allow sustained strong double-digit earnings growth. Many EM companies including Taiwan Semiconductor, Samsung Electronics, and SK hynix are increasingly recognized as key beneficiaries of the AI phenomenon. |
AI Chips Taiwan Samsung Cyclical |
DigitizationThe fund was most active in adding to its digitization theme by initiating positions in Indus Towers Limited and Tencent Music Entertainment Group. Indus is a leading telecommunications tower operator benefiting from industry consolidation and 5G rollout. TME is the largest online music platform in China with dominant market share and long runway for growth as music streaming is still in early stages with low paid penetration. |
5G Towers Music Streaming India | |
IndiaIndia is the fund's largest overweight country exposure and continues to deliver world-leading economic and earnings growth while offering a longer-term geopolitical dividend. The fund sees a multitude of exciting and high-return investment opportunities notwithstanding high relative valuations. Key investments include food delivery, telecommunications, and aviation companies benefiting from growing middle class and rising disposable income. |
Growth Geopolitical Consumer Aviation Telecom | |
FinTechNu Holdings Ltd is disrupting the financial services industry in Latin America via its digital distribution and intense focus on user experience, reaching over 90 million registered users in less than 10 years. The company reported strong balance sheet growth and continued improvement in profitability with initiatives to deploy new products and accelerate growth in new geographies yielding strong results. |
Digital Brazil Banking Disruption Users | |
ChinaAfter a weak start to the year given ongoing questions regarding growth momentum, China's economy and equity markets are exhibiting signs of stabilization and improvement, largely in response to policymakers' stepped-up efforts to restore consumer, business, and investor confidence. The fund believes many China holdings trade well below fundamental intrinsic value and any ongoing signs of recovery could trigger material repricing. |
Recovery Stimulus Valuation Policy Stabilization | |
| 2023 Q4 |
E-commerceThe fund added PDD Holdings, China's second largest e-commerce platform with 20% market share. PDD's competitive moat lies in its team purchase model facilitating bulk buying through direct partnerships with manufacturers. The company's international platform Temu has become one of the fastest growing apps globally, leveraging China's excess manufacturing capacity. |
PDD Holdings Temu Digital platforms China retail Cross-border |
SemiconductorsTaiwan Semiconductor and Samsung Electronics were top contributors due to expectations for cyclical recovery and AI chip demand. The fund maintains conviction in Taiwan Semi's technological leadership and exposure to secular growth markets including high-performance computing, automotive, 5G, and IoT. Samsung benefits from improving memory semiconductor outlook and AI-related demand. |
Taiwan Semi Samsung Memory chips AI demand Foundry | |
IndiaIndia is the fund's largest absolute and relative weighting. The manager believes India has reached escape velocity after productivity-enhancing reforms and stands out as a beneficiary in the evolving geopolitical environment. Holdings include consumer, wealth management, consumer finance, and real estate companies that are only scratching the surface of long-term potential. |
Domestic growth Reforms Consumer finance Wealth management Geopolitical | |
FinTechStrong performance from fintech disruption theme including XP Inc., Inter & Co., StoneCo, and Pine Labs. Brazilian rate-sensitive fintech holdings have been performing well since the Fed pivot. The fund views these companies as well-positioned for improving earnings momentum in a declining rate environment. |
Digital payments Brazil fintech Rate sensitivity Financial services Digital banking | |
ChinaChina exposure drove majority of relative underperformance due to lack of material earnings recovery after zero-COVID policy termination. The fund moved to modest underweight but believes current valuations remain below intrinsic value. Manager monitors government stimulus and policy developments that could serve as catalysts for positive repricing. |
Policy stimulus Valuation Earnings recovery Zero-COVID Geopolitical | |
| 2023 Q3 |
ChinaDespite recent underperformance driven by near-term economic concerns, the manager remains encouraged by ongoing regulatory and financial easing cycles. China's authorities appear sensitive to market signals with enhanced expectations for more substantial support forthcoming. The manager sees no evidence in China's currency, bond market, or credit spreads that policymakers are losing control. |
Stimulus Regulation Recovery Policy Reopening |
IndiaIndia has reached escape velocity after years of productivity-enhancing reforms and stands out as a material beneficiary in the evolving global geopolitical environment. The manager expects real GDP growth to sustain 6-8% CAGR over the next several years, presenting exciting bottom-up opportunities for long-term investors. |
GDP Growth Reforms Geopolitical Supply Chain Manufacturing | |
SemiconductorsTaiwan Semiconductor detracted due to weakening global macroeconomic environment and muted semiconductor demand across major end-markets. However, the manager retains conviction in Taiwan Semiconductor's technological leadership, pricing power, and exposure to secular growth markets including AI, automotive, 5G, and IoT. |
AI 5G IoT Automotive Technology | |
FinTechThe manager increased exposure to fintech disruption by initiating an investment in Nu Holdings, a Latin American digital bank. Nu is disrupting Brazil's oligopolistic financial services market via digital distribution and customer experience, reaching over 80 million registered users with minimal marketing investment. |
Digital Banking Brazil Disruption Credit ROE |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 27, 2026 | Fund Letters | Michael Kass | TSM | Taiwan Semiconductor Manufacturing Company Limited | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, Foundry, Pricing power, scale, semiconductors | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | 000660 KS | SK hynix Inc | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, HBM, Memory, Pricing, semiconductors | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | 005930 KS | Samsung Electronics Co Ltd | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, Foundry, HBM, Memory, semiconductors | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | BABA | Alibaba Group Holding Limited | Consumer Discretionary | Internet Retail | Bull | New York Stock Exchange | AI, China, cloud, ecommerce, Platforms | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | ABG SJ | Absa Group Limited | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, Credit cycle, Margins, South Africa, valuation | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | FSR SJ | FirstRand Limited | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, diversification, Margins, Returns, South Africa | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | NU | Nu Holdings Ltd | Financials | Consumer Finance | Bull | New York Stock Exchange | Credit, digital banking, Fintech, growth, Latin America | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 9988.HK | Alibaba Group Holding Limited | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | Hong Kong Stock Exchange | China, Cloud computing, digital media, e-commerce, Logistics, retail, Stimulus | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | SWIGGY.NS | Swiggy Limited | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | National Stock Exchange of India | Demographics, food delivery, India, market share, Middle Class, Mobile Technology | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | TRENT.NS | Trent Limited | Consumer Discretionary | Specialty Retail | Bull | National Stock Exchange of India | fashion, franchise, growth, India, operating leverage, Private-label, retail | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 3690.HK | Meituan | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | Hong Kong Stock Exchange | advertising, China, food delivery, Local Services, market share, super app, User Reviews | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 8069.TW | E Ink Holdings Inc | Information Technology | Electronic Equipment, Instruments & Components | Bull | Taiwan Stock Exchange | Digital Displays, Electronic shelf labels, energy efficiency, Epaper, patents, retail technology, Taiwan | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 300750.SZ | Contemporary Amperex Technology Co., Limited | Information Technology | Electrical Equipment | Bull | Shenzhen Stock Exchange | Batteries, China, Electric Vehicles, energy storage, manufacturing, Sustainability, technology leadership | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 207940.KS | Samsung Biologics Co., Ltd. | Health Care | Life Sciences Tools & Services | Bull | Korea Exchange | biopharmaceuticals, Biosecure Act, capacity expansion, CDMO, Korea, manufacturing, supply chain | Login |
| Sep 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 131390.KS | ISC Co., Ltd. | Information Technology | Semiconductors & Semiconductor Equipment | Bull | Korea Exchange | AI, Elastomer, high-performance computing, Korea, market share, Semiconductor Testing, Technology Transition | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | TSM | Taiwan Semiconductor Manufacturing Company Limited | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NYSE | 5G, AI, automotive, Foundry, high-performance computing, IoT, semiconductors, Taiwan, technology | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 0700.HK | Tencent Holdings Limited | Communication Services | Interactive Media & Services | Bull | HKEX | AI, China, Digital Entertainment, Gaming, platform, social media, technology, WeChat | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 009540.KS | HD Korea Shipbuilding & Offshore Engineering Co., Ltd. | Industrials | Marine | Bull | KRX | carbon emissions, environmental regulations, Korea, LNG, Marine, oligopoly, Shipbuilding, Sustainability | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | POWERGRID.NS | Power Grid Corporation of India Limited | Utilities | Electric Utilities | Bull | NSE | energy transition, Government-owned, Grid, India, infrastructure, Power Transmission, renewable energy, utilities | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | CUMMINSIND.NS | Cummins India Limited | Industrials | Industrial Machinery | Bull | NSE | backup power, data centers, Engines, India, industrial machinery, infrastructure, manufacturing, Power generation | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | SRF.NS | SRF Limited | Materials | Specialty Chemicals | Bull | NSE | environmental regulations, India, innovation, Low GWP, R&D, refrigerants, specialty chemicals, Sustainability | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | WEGE3.SA | WEG S.A. | Industrials | Electrical Equipment | Bull | B3 | Brazil, E-mobility, electric motors, energy efficiency, Industrial Equipment, Power Infrastructure, renewable energy, vertical integration | Login |
| Jun 30, 2024 | Fund Letters | Baron Emerging Markets Fund | 4966.TW | ASPEED Technology Inc. | Information Technology | Semiconductors & Semiconductor Equipment | Bull | TWSE | AI servers, BMC, hyperscale, infrastructure, semiconductors, Server management, Taiwan, technology | Login |
| Dec 31, 2023 | Fund Letters | Baron Emerging Markets Fund | AIR FP|ICLR|LIN|MRVL|NOW|TSM | Taiwan Semiconductor Manufacturing Company Limited | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NYSE | 5G, AI, automotive, Cyclical Recovery, Foundry, high-performance computing, IoT, semiconductors, Taiwan, technology | Login |
| Dec 31, 2023 | Fund Letters | Baron Emerging Markets Fund | 005930.KS | Samsung Electronics Co., Ltd. | Information Technology | Technology Hardware, Storage & Peripherals | Bull | Korea Exchange | 5G, AI, DRAM, Foundry, High-Bandwidth Memory, Korea, memory semiconductors, Nand, Smartphones, technology hardware | Login |
| Dec 31, 2023 | Fund Letters | Baron Emerging Markets Fund | TRENT.NS | Trent Limited | Consumer Discretionary | Specialty Retail | Bull | National Stock Exchange of India | Consumer Discretionary, fashion, Franchisee, India, operating leverage, Private-label, retail, same-store sales, Zudio | Login |
| Dec 31, 2023 | Fund Letters | Baron Emerging Markets Fund | PDD | PDD Holdings Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | China, Digitization, e-commerce, international expansion, manufacturing, platform, Team purchase, Temu, Value retail | Login |
| Dec 31, 2023 | Fund Letters | Baron Emerging Markets Fund | KAYNES.NS | Kaynes Technology India Limited | Information Technology | Electronic Equipment, Instruments & Components | Bull | National Stock Exchange of India | automotive, Defense, Electronics Manufacturing, EMS, High-value manufacturing, India, Make in India, Semiconductor assembly, supply chain diversification | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | AIR FP|ICLR|LIN|MRVL|NOW|TSM | Taiwan Semiconductor Manufacturing Company Limited | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NYSE | 5G, AI, automotive, Foundry, high-performance computing, IoT, Pricing power, semiconductors, technology leadership | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | 005930.KS | Samsung Electronics Co., Ltd. | Information Technology | Technology Hardware, Storage & Peripherals | Bull | Korea Exchange | 5G, conglomerate, Foundry, Memory, semiconductors, Smartphones, South Korea, technology hardware | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | 000700.HK | Tencent Holdings Limited | Communication Services | Interactive Media & Services | Bull | Hong Kong Stock Exchange | advertising, China, Digital platforms, entertainment, Fintech, Gaming, generative AI, social media, WeChat | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | SUZB3.SA | Suzano S.A. | Materials | Paper & Forest Products | Bull | B3 | Brazil, Carbon Credits, ESG, Fossil-to-fiber, Low-cost producer, materials, Paper, Pulp, Sustainability | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | TATACOMM.NS | Tata Communications Limited | Communication Services | Diversified Telecommunication Services | Bull | National Stock Exchange of India | cloud, data infrastructure, Digital transformation, fiber network, hyperscalers, India, Internet routes, telecommunications | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | 600519.SS | Kweichow Moutai Co., Ltd. | Consumer Staples | Distillers & Vintners | Bull | Shanghai Stock Exchange | Baijiu, Brand Equity, Channel optimization, China, consumer staples, premium spirits, Pricing power, shareholder value | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | MAHM.NS | Mahindra & Mahindra Limited | Consumer Discretionary | Automobile Manufacturers | Bull | National Stock Exchange of India | automotive, conglomerate, Electric Vehicles, Farm Equipment, financial services, India, IT services, SUVs, Tractors | Login |
| Sep 30, 2023 | Fund Letters | Baron Emerging Markets Fund | ARGX BB|DAVA|DDOG|GLOB|ILMN|LOAR|MELI|NET|NU|NVDA|TSM | Nu Holdings Ltd. | Financials | Consumer Finance | Bull | NYSE | Brazil, credit cards, Customer Acquisition, digital banking, disruption, Fintech, Latin America, operating leverage | Login |
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | South Korean semiconductor company SK hynix Inc. is the current leader in high-bandwidth memory (HBM), the specialized memory used alongside AI processors, and a leading producer of dynamic random-access memory (DRAM) and NAND flash memory. Shares rose during the quarter as the company provided perhaps the clearest evidence yet of the supply-constrained nature of the AI memory market. Customers have pre-booked more than three years of HBM supply, exceeding what SK hynix can currently produce, and are increasingly focused on securing supply rather than negotiating price. That pricing power drove record profitability in what is typically a seasonally weaker quarter, and management characterized the current cycle as structurally different from the boom-bust patterns of the memory industry's past. We retain conviction in SK hynix as a core long-term holding, viewing its leadership in the HBM market, its position as a key supplier to the leading AI chip maker, and favorable industry supply-demand dynamics as durable advantages that support multi-year earnings power. |
| TSM | Taiwan Semiconductor Manufacturing Company Limited (TSMC) is the world's largest contract chipmaker and the leading manufacturer of advanced logic semiconductors used in modern AI accelerators. Shares rose during the quarter as investors increasingly recognized that TSMC, rather than any individual chip designer, sits at the center of the AI supply chain. High-performance computing now represents the majority of TSMC's business. AI demand is consuming so much leading-edge capacity that smartphone and PC production is increasingly shifting to older technology nodes, reversing a dynamic that defined the foundry industry for much of the past decade. Management also raised its full-year outlook and increased capital spending to support demand that remains well above available supply. We retain long-term conviction in TSMC and view its leading-edge manufacturing monopoly, pricing power, and 2-nanometer technology roadmap as durable advantages that support multi-year earnings power. |
| 005930.KS | South Korean technology conglomerate Samsung Electronics Co., Ltd. is the world's largest memory chip maker and also operates major smartphone, display, and contract manufacturing businesses. Shares rose during the quarter as the company delivered a genuine turnaround in its most strategically important product. After years of trailing its closest rival in the HBM that AI systems depend on, Samsung became the first to ship next-generation HBM4 at volume for the leading AI accelerator's upcoming platform. The result was record memory profitability, driven by sharply higher pricing, even as those same rising memory costs pressured its own smartphone business, a striking illustration of how the company both benefits from and pays for the memory boom. We retain conviction in Samsung as a core long-term holding, viewing its HBM4 leadership, the breadth of its memory franchise, and its advanced foundry optionality as durable advantages that support multi-year earnings power. |
| BABA | Alibaba Group Holding Limited is China's largest e-commerce and cloud computing company. Shares fell after Alibaba reported quarterly results that showed lower group profitability and negative free cash flow as the company ramped investment in AI infrastructure and the buildout of its Qwen model ecosystem. Total spending is now expected to exceed Alibaba's prior three-year capital budget. Persistent weakness in Chinese consumption and intensifying e-commerce competition weighed on the core retail franchise, while losses in its instant-commerce initiative and other new ventures widened. Despite this near-term earnings reset, our conviction in Alibaba remains intact. Cloud revenue growth accelerated, and management for the first time disclosed the scale of its AI business, with model-as-a-service run-rate revenue expected to exceed RMB 30 billion by fiscal year end. We believe this validates the company's differentiated full-stack positioning across proprietary chips, cloud infrastructure, and leading models. We view Alibaba as one of the best-positioned proxies for China's AI supply chain and remain invested. |
| 1211.HK | BYD Company Limited, a leading Chinese manufacturer of electric vehicles and batteries, detracted from performance in the second quarter. China's domestic new energy vehicle market remained highly competitive as ongoing price competition and weak consumer demand pressured automotive manufacturers across the sector. A reduction in national purchase incentives, which had pulled demand forward into 2025, added to these near-term headwinds. Partially offsetting the softer domestic environment, BYD's international business remained a bright spot, with overseas deliveries increasing more than 80% year over year during the quarter and accounting for more than 40% of total vehicle volume. Looking ahead, BYD's premium model expansion and next-generation battery technology should drive a richer product mix over time. We continue to own the stock, as BYD's cost leadership, vertical integration, and growing export business support our long-term investment thesis, though we continue to monitor domestic pricing competition and the pace of consumer demand recovery. |
| 688008.SS | Shares rose during the quarter as the company provided perhaps the clearest evidence yet of the supply-constrained nature of the AI memory market. |
| GMEXICO.MX | The manager added to the position during the quarter as part of ongoing capital allocation to highest conviction ideas. |
| 300750.SZ | Contemporary Amperex Technology Co., Limited is a top 10 holding representing 1.5% of net assets. The manager added to the position during the quarter. |
| GDS | GDS Holdings Limited was mentioned as a detractor in the Information Technology sector within the China value-added theme, contributing to weak stock selection effect during the quarter. |
| 0268.HK | Kingdee International Software Group Company Limited was mentioned as a detractor in the Information Technology sector within the China value-added theme, contributing to weak stock selection effect during the quarter. |
| PONY | Pony AI Inc. was mentioned as a detractor in the Information Technology sector within the China value-added theme. The manager added to the position during the quarter despite near-term underperformance. |
| DIVISLAB.NS | Divi's Laboratories Limited is a leading global active pharmaceutical ingredients (APIs) and intermediates manufacturer. The company specializes in generic API production, custom synthesis, and nutraceuticals. By leveraging its deep capabilities in process chemistry, scale manufacturing, and strong execution in complex molecules, Divi's has built strong relationships with global innovators and leading pharmaceutical companies and plays a key role in the global pharmaceutical value chain. In our view, the company is a key beneficiary of global supply chain realignment, as innovator and generic customers diversify their API sourcing away from China. We are encouraged that Divi's has been onboarded by large global innovators and pharmaceutical companies into the oral GLP-1 and GLP-1 injectables value chain as a supplier of complex intermediates and custom manufactured peptides. This opportunity underscores Divi's strengths in large-scale, late-stage commercial manufacturing and provides multi-year revenue visibility as GLP-1 demand continues to expand globally. We are also excited by the company's commitment to capacity expansion and its sustained focus on R&D. We expect the company to deliver mid-teens compound revenue growth and 20% earnings growth over the next three to five years. |
| NU | Nu Holdings Ltd. was added to during the quarter as part of the manager's ongoing capital allocation to highest conviction ideas. |
| POWERGRID.NS | Power Grid Corporation of India Limited was added to during the quarter as part of the manager's ongoing capital allocation to highest conviction ideas. |
| OTP.BD | OTP Bank Nyrt is the leading banking franchise in Hungary and one of the premier financial institutions across Central and Eastern Europe, with operations spanning 11 countries. Over several decades, OTP has built a highly profitable, low-cost banking platform supported by strong retail and commercial market positions, a conservative balance sheet, and a disciplined capital allocation framework. While we have long admired the quality of the franchise, we believe the investment case has strengthened following Hungary's recent political transition, which is likely to create a significantly more supportive operating environment. The new government's pro-European stance is expected to improve business confidence, reduce sovereign borrowing costs, facilitate the release of previously suspended EU funds, and create a more predictable policy framework for the private sector. At the same time, there is growing optimism that the extraordinary tax and regulatory burdens imposed on the banking sector in recent years will be gradually reduced as policymakers seek to encourage investment and economic growth. Together, these developments have the potential to accelerate credit demand, improve underwriting quality and increase profitability across the financial system while lowering the cost of equity applied to Hungarian assets. As the country's market leader, and with a diversified regional footprint that provides additional avenues for organic growth and acquisitions, we believe OTP is uniquely positioned to benefit from this improving backdrop. In our view, the combination of a high-quality franchise, favorable structural and cyclical tailwinds, and an attractive valuation creates a compelling opportunity for both earnings growth and long-term shareholder returns. |
| 0700.HK | Tencent Holdings Limited is a top 10 holding representing 2.7% of net assets and was mentioned as a detractor during the quarter. |
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