| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 3.82% | 3.82% |
The Shelton Emerging Markets Fund returned 3.82% in Q1 2026 versus -0.17% for the MSCI Emerging Markets Index, navigating a quarter defined by two distinct phases. January and February delivered on the favorable conditions framework of resilient global growth, weakening dollar, and attractive valuations, with emerging markets outpacing developed markets by substantial margins. AI-driven hardware demand reshaped Asian technology landscapes, particularly benefiting Samsung, SK Hynix, and Taiwan's semiconductor supply chain. However, the Iran shock in late February fundamentally altered the investment environment. Operation Epic Fury closed the Strait of Hormuz, sending oil prices surging 63.4% and triggering the worst month for Asian equities since October 2008. India declined 20% due to acute oil import dependency, while Korea gave back January gains despite strong underlying AI infrastructure positioning. The portfolio's stock selection contributed roughly 200 basis points to relative performance, offset by factor headwinds from energy underweighting. Post-selloff valuations now present compelling opportunities, with Korea trading at 6.6x forward earnings, more than two standard deviations below historical averages.
Emerging markets offer compelling structural opportunities despite near-term geopolitical disruption, with AI-driven technology supply chains, infrastructure buildout, and attractive post-selloff valuations creating selective investment opportunities for patient capital.
The investment backdrop entering Q2 2026 is more complicated than Q1, but the core opportunity in emerging markets has become more selective and interesting. Valuations after March's selloff are the most compelling in years, with Korea's forward P/E collapsing to 6.6x. The manager remains committed to capturing structural themes through patient stock selection as the macro environment evolves.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | 005930 KS, 2360.TW, GEKTERNA.AT, HDFCBANK.NS, INFY | AI, Asia, Dollar, emerging markets, energy, Geopolitical, Oil Shock, semiconductors |
005930.KS GEKTERNA.AT HDFCBANK.NS |
Shelton Emerging Markets outperformed despite Iran shock disruption, with AI infrastructure beneficiaries Samsung and Chroma ATE driving returns while oil-sensitive India holdings detracted. Strong stock selection overcame factor headwinds from energy underweighting. Post-selloff valuations create compelling opportunities for patient capital focused on structural themes including Asian technology supply chains and infrastructure buildout. |
| Oct 31 2025 | 2025 Q3 | 1211.HK, 2308.TW, 3606.HK, BVT.JO | AI, Asia, China, commodities, emerging markets, growth, technology | - | Shelton Emerging Markets Fund outperformed by 250bp in Q3 2025, driven by AI-accelerated technology holdings and commodity revival. The fund captures structural growth across Asia's tech supply chain while benefiting from global AI investment and firming commodity demand. Despite EV competition headwinds, the outlook remains constructive with supportive monetary policy and attractive valuations versus developed markets. |
| Aug 22 2025 | 2025 Q2 | 1093.HK, IGTI11.SA, JD, WIT | commodities, Dollar, earnings, emerging markets, Fed policy, Trade Policy, Valuations |
1093 HK IGTI11 BZ WIT JD 1093.HK IGTI11.SA WIT JD |
Emerging markets posted their strongest quarterly gain in two years at 12.17%, driven by dollar weakness, earnings upgrades, and commodity strength. The fund returned 11.05% with mixed stock selection results. Three key conditions for EM outperformance remain intact: strong global growth, weak dollar, and attractive valuations, though trade policy uncertainty poses ongoing risks. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI-driven hardware demand continued to reshape the technology landscape in Asia, with Samsung, SK Hynix, and the broader memory complex benefiting from accelerating capital investment in AI data centers. The software-versus-hardware split continued with companies building the physical infrastructure of AI outperforming those facing disruption. |
Memory Data Centers Semiconductors Hardware Infrastructure |
OilThe Iran shock closed the Strait of Hormuz and sent crude oil surging past $100 per barrel, ultimately touching $119. WTI crude finished Q1 up 63.4%, creating severe headwinds for oil-importing emerging market economies, particularly India and Korea. |
Energy Geopolitical Commodities Iran Supply | |
SemiconductorsKorea surged almost 24% in January as Samsung, SK Hynix, and the memory complex benefited from AI data center investment. Taiwan's semiconductor supply chain followed with strong performance. However, March saw a dramatic selloff following Google's chip compression algorithm announcement. |
Memory Korea Taiwan Manufacturing Equipment | |
DollarThe U.S. dollar continued to weaken through February, with the trade-weighted dollar index falling roughly 7.5% in 2025 and pushing further in January. A weaker dollar is a genuine structural tailwind for emerging market assets, easing financial conditions and supporting commodity prices. |
Currency Financial Conditions Commodities Structural | |
IndiaIndia declined approximately 20% in U.S. dollar terms for the full quarter due to acute exposure to the oil shock. The country experienced record foreign institutional outflows and the rupee hit all-time lows, driven by concerns about sustained high oil prices on growth and inflation. |
Energy Import Currency Outflows Growth Inflation | |
| 2025 Q3 |
AIThe AI boom continued to reshape emerging markets, particularly across Asia. Rapid investment in data-center infrastructure and semiconductor capacity fueled demand for power systems, cooling solutions, and component suppliers, with Taiwanese and Korean technology firms leading the advance. AI-driven industrial investment is accelerating globally. |
Data Centers Semiconductors Power Electronics Infrastructure Spending |
CommoditiesStronger global demand for energy and industrial metals benefited resource-driven markets, especially Brazil and Chile. The pickup in capital investment linked to AI and clean energy added momentum to commodity consumption. Commodity demand is firming as part of the constructive backdrop. |
Energy Metals Industrial Metals Brazil | |
| 2025 Q2 |
DollarSix consecutive months of dollar weakness boosted EM currency translations and helped moderate imported inflation. The trade-weighted index of the dollar versus foreign currencies is down over 10% so far this year, creating favorable conditions for emerging market performance. |
Currency USD Weakness Translation Inflation |
EarningsConsensus 2025 EM EPS was revised up in Q2 after an already solid Q1 uplift, with technology, industrials and materials leading upgrades. Korea, Taiwan and Greece were top-performing markets driven by positive earnings surprises and foreign inflows. |
EPS Revisions Technology Industrials Materials | |
CommoditiesBrent rebounded 5.8% despite mid-quarter geopolitical flare-ups, while industrial metals gained 4.8% as cap-ex linked to AI and green transition accelerated. Commodity prices have been strong, indicating increasing economic demand. |
Brent Industrial Metals AI Green Transition Demand | |
Trade PolicyThe ultimate source of uncertainty for this scenario is the trade war being waged between the United States and non-U.S. countries over tariffs. Finalization and implementation of U.S. trade-tariff agreements with early Q3 deadlines represents a key watch-point. |
Tariffs Trade War Agreements Uncertainty Implementation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2026 | Fund Letters | Shelton Emerging Markets Fund | 005930.KS | Samsung Electronics | Consumer Electronics | Semiconductors & Semiconductor Equipment | Bull | New York Stock Exchange | AI infrastructure, Artificial Intelligence, data centers, High-Bandwidth Memory, memory chips, semiconductors, South Korea, technology hardware | Login |
| Mar 31, 2026 | Fund Letters | Shelton Emerging Markets Fund | GEKTERNA.AT | GEK Terna | Engineering & Construction | Construction & Engineering | Bull | New York Stock Exchange | Capital Goods, construction, energy transition, European defense, Greece, infrastructure, renewable energy, Southern Europe | Login |
| Mar 31, 2026 | Fund Letters | Shelton Emerging Markets Fund | - | Chroma ATE | Other | Electronic Equipment, Instruments & Components | Bull | New York Stock Exchange | AI infrastructure, Capital equipment, Electronic Equipment, Precision Testing, Second-derivative AI, Semiconductor Testing, Taiwan, Test Equipment | Login |
| Mar 31, 2026 | Fund Letters | Shelton Emerging Markets Fund | HDFCBANK.NS | HDFC Bank | Banks - Regional | Banks | Neutral | New York Stock Exchange | Foreign Outflows, High-quality Bank, India, Indian Banking, macro headwinds, Oil Shock Impact, Private Sector Bank, Rupee Weakness | Login |
| Aug 22, 2025 | Fund Letters | Derek Izuel | 1093 HK | CSPC Pharmaceutical Group Limited | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | Approvals, Generics, innovation, pharmaceuticals, pipeline | Login |
| Aug 22, 2025 | Fund Letters | Derek Izuel | IGTI11 BZ | Iguatemi S.A. | Real Estate | Retail REITs | Bull | Brasil Bolsa Balcão | Brazil, Malls, Occupancy, realestate, retail | Login |
| Aug 22, 2025 | Fund Letters | Derek Izuel | WIT | Wipro Limited | Information Technology | IT Services | Bear | New York Stock Exchange | Demand, Execution, Itservices, Margins, Outsourcing | Login |
| Aug 22, 2025 | Fund Letters | Derek Izuel | JD | JD.com, Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bear | New York Stock Exchange | China, Competition, ecommerce, Logistics, Margins | Login |
| Jun 30, 2025 | Fund Letters | Shelton Emerging Markets Fund | 1093.HK | CSPC Pharmaceutical Group | Health Care | Pharmaceuticals | Bull | Hong Kong Stock Exchange | China, Drug Approvals, Emerging markets, Generic Drugs, growth, healthcare, innovation, pharmaceuticals | Login |
| Jun 30, 2025 | Fund Letters | Shelton Emerging Markets Fund | IGTI11.SA | Iguatemi S.A. | Real Estate | Retail REITs | Bull | B3 (Brasil Bolsa Balcão) | Asset Acquisition, Brazil, Emerging markets, Premium Assets, Real Estate, REITs, retail, shopping centers | Login |
| Jun 30, 2025 | Fund Letters | Shelton Emerging Markets Fund | WIT | Wipro Limited | Information Technology | IT Consulting & Other Services | Bear | New York Stock Exchange | ADR, Deal Conversion, Emerging markets, India, IT services, project delays, revenue decline, Technology Consulting | Login |
| Jun 30, 2025 | Fund Letters | Shelton Emerging Markets Fund | JD | JD.com Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bear | NASDAQ | capital allocation, China, Competitive pressure, e-commerce, Emerging markets, food delivery, margin compression, online marketplace | Login |
| TICKER | COMMENTARY |
|---|---|
| 005930.KS | Samsung Electronics was the leading contributor in the portfolio. Samsung returned +31.6% for the quarter, driven by surging demand for high-bandwidth memory chips used in AI data centers and continued momentum from its strategic partnership with OpenAI announced in Q4 2025. The company's position in the AI infrastructure supply chain — not just memory, but packaging and advanced manufacturing — continues to deepen, and earnings revisions throughout Q1 reflected that. Samsung remained our largest single position, and we maintain conviction in its role as a central beneficiary of the AI capital spending cycle. |
| GEKTERNA.AT | GEK Terna The Greek construction and infrastructure company returned +30.8% in the quarter, benefiting from sustained infrastructure investment across Southern Europe and its growing renewable energy project pipeline. GEK Terna has been a consistent performer in the portfolio, and its exposure to European defense and infrastructure buildout — themes that accelerated in Q1 — reinforced our thesis. |
| 2360.TW | Chroma ATE returned +85.8% during the quarter. The Taiwanese test and measurement equipment maker is a direct beneficiary of the AI-driven semiconductor capital expenditure cycle: as chipmakers invest heavily in next-generation capacity, demand for precision testing systems rises with them. This is exactly the kind of second-derivative AI exposure that we have been deliberately building — companies that benefit from the infrastructure build without carrying the direct obsolescence risk of the software and services layer. |
| HDFCBANK.NS | HDFC Bank was the largest detractor. The stock declined -31.7% in the quarter, almost entirely a function of India's acute exposure to the oil shock. India's equity market fell roughly 20% in U.S. dollar terms over the quarter, driven by the combination of record foreign outflows, a weakening rupee, and genuine economic concern about the impact of sustained high oil prices on growth and inflation. HDFC Bank, as a high-quality holding with a meaningful position size, bore the brunt of that country-level selling. Our view on the underlying business remains unchanged; the challenge was positional, not fundamental. |
| INFY | Infosys fell by -25.1%. Indian IT services have been under consistent pressure as clients reassess technology spending in the context of AI-driven productivity gains — a dynamic we have been watching since 2025. The Iran shock added a macro overlay to what was already a headwind. |
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