| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.3% | 0.1% | 21.6% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 21.6% | 3.1% | 11.7% | -34.2% | -9.0% | 54.8% |
Sands Capital's Emerging Markets Growth strategy delivered 21.6% net returns in 2025 but lagged the MSCI Emerging Markets Index due to multiple compression overwhelming benchmark-topping earnings growth. The portfolio faced headwinds from select ecommerce businesses including Sea, MercadoLibre, and Coupang, which accounted for 75% of underperformance despite strong fundamentals. Positive contributions came from AI-beneficiary semiconductors, particularly SK hynix, Samsung Electronics, and Taiwan Semiconductor, which rallied on strengthening memory chip cycles and sold-out inventory through 2026. The firm maintains meaningful AI exposure while avoiding speculative areas, focusing on businesses providing critical hardware and software with clear economic models. Portfolio changes included adding Alibaba and DiDi Global while exiting lower-conviction positions. Looking forward, the strategy is positioned for secular growth drivers including digitalization, industry consolidation, and AI acceleration of winner-takes-most dynamics. The portfolio trades at historically low relative valuations with expectations for mid-20% annualized earnings growth over five years, creating compelling risk-reward potential.
Emerging Markets Growth seeks to selectively own premier emerging market growth businesses benefiting from and driving secular change, including digitalization, industry consolidation and formalization, and life sciences innovation, while maintaining concentration, conviction, and patience as the foundation of investment approach.
The firm continues to see several secular forces capable of underpinning strong earnings growth for select businesses, from financial penetration to industry formalization and consolidation. AI is accelerating a winner-takes-most dynamic, benefiting companies with scale, differentiated offerings, and ability to productize innovation. Portfolio valuation enhances return potential with median holding 12 percent below 52-week high and expectation for mid-20 percent annualized earnings growth over next five years.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 22 2026 | 2025 Q4 | 000660.KS, 005930.KS, 0700.HK, 1211.HK, 122870.KS, 1299.HK, 1810.HK, 2269.HK, 2454.TW, 300750.SZ, 3690.HK, 4966.TW, 500570.BO, 532978.BO, APHS.NS, ASML, BABA, BBCA.JK, CPNG, DIDI, DNP.WA, FPT.VN, FTA, GLOB, GRAB, HDB, HDFCLIFE.NS, HTHT, ICT.PS, KSPI.L, MELI, NU, PHNX.NS, RADL3.SA, SE, TSM, WEGE3.SA, WMMVY | AI, China, E-Commerce, emerging markets, growth, Memory Chips, semiconductors, technology | - | AI is spreading across industries, reshaping business models and driving market leadership. The firm sees an ongoing AI boom rather than a full bubble, with meaningful exposure in semiconductors and digital advertising while maintaining valuation discipline. Memory chip cycle strengthening fueled by growing AI demand. SK hynix and Samsung are effectively sold out of memory inventory for 2026 with limited capacity in 2027. High-bandwidth memory remains essential for AI servers. Select ecommerce businesses underperformed despite strong fundamentals. Sea, MercadoLibre, and Coupang faced near-term headwinds from increased investment and competitive pressure, but maintain strong long-term positioning. Defense technology entering structural growth phase driven by rising geopolitical risk and convergence of military and commercial innovation. Focus on autonomous systems, space sensing, and secure communications. AI advances pushing robotics forward with near-term opportunities in logistics and warehouse environments. Focus on companies that make robots reliable and economically compelling rather than headline-grabbing names. Energy transition blending with new power demand from data centers and AI, straining grids and forcing aggressive investment in power infrastructure. Multiyear investment cycle expected across entire power value chain. |
| Oct 20 2025 | 2025 Q3 | 000660 KS, 005930 KS, 6862 CH, BBCA IJ, BHARTI IN, CATL, DNOPY, GLOB, HDFCB IN, MELI, NU, RIGD LN, SE, TCEHY, TSM | Artificial Intelligence, E-Commerce, emerging markets, Fintech, semiconductors | - | The fund highlights how AI adoption and financial inclusion are reshaping emerging markets. Technology hardware and semiconductor exposure benefits from surging AI infrastructure demand in Taiwan and Korea, while digital finance platforms in Latin America drive inclusion-led growth. Consumer internet leaders continue expanding in e-commerce and payments across Asia and Latin America. |
| Jul 21 2025 | 2025 Q2 | 006400 KS, 1810 HK, 3347 HK, 6862 HK, BZ, CPNG, DMART IN, GLOB, MDTC, MELI, NU, RADLY, SE, TSM, YMM | AI, Digital, E-Commerce, emerging markets | - | |
| Mar 31 2025 | 2025 Q1 | 1211 HK, 3690 HK, 5274 TT, APHS IN, ARHI, BAF IN, ETERNAL IN, FPTVN19 TB, GLOB, ICT PM, MELI, PHNX IN, SE, TCEHY, TCS IN, TSM, WALMEX MM, WEGZY | - | - | |
| Dec 31 2024 | 2024 Q4 | 300750 CH, 603288 CH, APP, BYD, GRAB, HTHT, LAM, NOW, NU, RENT3 BZ, RJHI AB, SSFN, TSM, YMM | - | - |
| 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 |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
E-commerceSeveral investments in e-commerce leaders across Asia and Latin America, including MercadoLibre, Sea Limited and Alibaba, faced a more competitive operating environment during the period. As long-term investors, SGA observes that competitive intensity in these markets tends to ebb and flow over shorter time horizons, with market leaders typically emerging from such periods with strengthened strategic positions given inherent network effects. |
Marketplaces Competition Network Effects Asia Latin America | |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure | |
RoboticsRobotics was identified as one of the manager's top five secular trends for the near-to-medium term. This represents an area of focus for finding category leaders before they become widely discovered, though specific robotics investments were not detailed in this letter. |
Automation Technology Industrial Innovation | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
| 2025 Q3 |
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 |
ConsumerThe consumer segment includes DJL Petfoods (pet food ingredients distributor) and TSDC Wholesale (food and grocery wholesale). DJL exemplifies RDCP 2.0 characteristics as an asset-light but infrastructure-critical business with long-standing customer relationships, exceptional retention rates, and exposure to growing pet ownership and premiumisation trends. These businesses benefit from structural advantages and recurring revenue streams. |
Pet Care Food Distribution Consumer Staples Wholesale Distribution | |
FinancialsEuropean banks have been rehabilitated after years in purgatory, with returns of 77% in 2025. Return on equity has normalized above 12% following exit from ultra-low rates, while capital positions have been rebuilt. However, supportive factors are well-appreciated by markets, reflected in significant valuation re-rating. |
Banks Return On Equity Interest Rates Capital Valuations | |
| 2025 Q2 |
Digitalization |
|
Emerging marketsGlobal equities, especially those outside the U.S., powered equity returns. In emerging markets, shares of companies linked to commodities were the strongest performers as commodities rallied. Even after a strong year for international and emerging markets shares, we still see some of the best value in the world in these areas. |
International Commodities Non-US Best Value | |
Innovation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | SK Hynix has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft's in-house AI accelerator and securing roughly two-thirds of NVIDIA's anticipated HBM4 demand for its next-generation platforms at meaningfully higher price points and margins than prior generations. |
| 005930.KS | Top gainers included Samsung (+38% in U.S. dollar terms) |
| 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. |
| 1211.HK | The contributors in returns in 2025 came from BYD Co Ltd, American Express Co, and Bank of America Corp. Similarly with BYD, the thesis is simple. It has the most integrated operations and lowest costs. Yes, there is currently a price war but that means that BYD can drive much-needed consolidation in China and perhaps beyond. Moreover, with its low-cost structure, BYD can choose to return the industry to profitability when it wants. |
| 1299.HK | Proceeds were deployed to three Asian companies: 1) Alibaba Group Holding is the largest Chinese e-commerce and cloud company, which has stabilized its e-commerce business and invested in the growing cloud business; 2) Asian insurance company AIA Group Limited is leveraging growing demand from Hong Kong, China and other Asian countries; and 3) Chinese company Ping An Insurance may benefiting from the structural demand for health and protection products given the aging population and limited coverage of national insurance. |
| 1810.HK | Shares declined amid inconsistent growth in the smartphone business, with strong competition limiting market share gains, while rising memory chip prices also pressured smartphone margins. In the electric vehicle business, Xiaomi has struggled to scale production to meet order demand. |
| 2269.HK | WuXi Biologics' new order momentum remains robust, and its capex plan is progressing as scheduled. The stock had appreciated over 100% in the first three quarters of the year and faced some profit-taking in 4Q25. |
| 2454.TW | MediaTek is Taiwan's leading chip designer, forming a duopoly in the smartphone market with Qualcomm. Stable pricing and cash generation support the business, while artificial intelligence growth potential through its partnership with Google is underappreciated by the market. |
| 300750.SZ | CATL alone commands 38% market share in global lithium-ion battery production |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| BABA | Alibaba was a detractor during the quarter after the company reported mixed fiscal Q2 results. While cloud revenue growth accelerated and margins remained stable, the core commerce business struggled with slowing growth and significant profit pressure, particularly in the quick commerce segment where heavy investment and intense competition led to a sharp decline in profitability. |
| CPNG | Shares of Coupang, Inc., Korea's largest e-commerce platform, declined 26.7% in the fourth quarter (though up 7.3% in 2025). The weakness was initially driven by elevated upfront investments in its new market, Taiwan, where aggressive customer acquisition, supplier onboarding and product procurement, and logistics infrastructure buildout weighed on near-term profitability. |
| DNP.WA | In the quarter, we added to several names in the portfolio that would loosely fit this description – Danaher and Linde to name two – and introduced new positions with Arthur J Gallagher, an insurance broker, and Dino Polska, a fast-growing Polish grocer. |
| GLOB | The capital was reallocated to Globant, an Argentinian digital engineering services leader. Macro headwinds and market concerns around AI's potential impact on digital services business models drove a significant drawdown in 2025, with the stock de-rating to 10x forward earnings – its lowest valuation in history, and a substantial discount to its historical average of 30x. Today, Globant's project pipeline stands at $3.7b, versus 2025's revenue of $2.5b, and we expect the company to grow earnings at a high single-digit rate. |
| GRAB | Grab Holdings was a detractor during the quarter despite delivering solid Q3 results and raising full-year revenue guidance. The results were balanced across user and transaction growth, revenues, and margins, with growth in gross merchandise value and monthly transacting users accelerating from last quarter. |
| KSPI.L | As in the first half of the year (refer to our last investor letter), Kaspi's share price lagged in the second half of the year. Some market challenges in Kazakhstan only became visible in reported results during the latter half of the year, which resulted in more muted revenue and profit growth for Kaspi than what investors have historically been used to. New government smartphone registration requirements and iPhone shortages depressed e-commerce revenues (smartphones are a material revenue generator for most large online general merchandise retailers), whilst higher banking reserve requirements, a new tax on interest income and higher base rates payable on customer deposits depressed interest income on the banking side of the business. |
| MELI | E-commerce Volatility: turbulence in our e-commerce portfolio companies, Sea Ltd (Southeast Asia) and MercadoLibre (Latin America), amidst aggressive price wars. |
| NU | Since our mid-year update, Nubank's shares increased 37%, bringing full-year performance to +63%. This performance has been driven primarily by fundamentals, with earnings growing approximately 42% over the same period. Brazil remains a powerful profit engine, with high customer engagement, improving risk-adjusted returns, and expanding penetration across consumer and SME banking. Mexico continues to emerge as the next major growth vector: customer penetration has reached ~14% of the population. |
| SE | During the quarter, we initiated a new position in Sea Limited, a Southeast Asian consumer internet company with an integrated ecosystem combining e-commerce, digital payments, and entertainment. Sea has a diversified business model, with its Shopee e-commerce platform, a mobile-centric marketplace that provides integrated payments, logistics infrastructure, and seller services. |
| TSM | TSMC was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. |
| WEGE3.SA | WEG is one of the world's largest manufacturers of electric equipment. Shares moved higher following third-quarter results that reassured investors after a challenging stretch marked by tariff-related concerns. The absence of negative surprises helped reframe the quarter as a clearing event rather than a negative inflection point. |
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