Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 31st December 2025
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The Wasatch Frontier Emerging Small Countries strategy underperformed in Q4 2025 and for the full year, despite strong underlying fundamentals in portfolio companies. The strategy's focus on higher-quality businesses with stronger earnings growth and higher multiples meant it did not participate in the dramatic recovery of beaten-down frontier market stocks that benefited most from dollar weakness. Countries with little portfolio exposure like Pakistan, Egypt and Colombia surged 50-100%+ as currency pressures eased. Key detractors included Sea Ltd. facing competition concerns, Baltic Classifieds dealing with AI disruption risks, and MercadoLibre investing heavily amid Amazon competition. Contributors included Discovery Ltd. benefiting from banking growth, FPT Digital Retail reaching scale velocity in Vietnamese pharmacy market, and Fabrinet gaining from AI-driven data center upgrades. The manager believes 2025 marked an inflection point for frontier markets with potential for sustained dollar weakness creating tailwinds. Portfolio companies are positioned to benefit from domestic transformations and should be rewarded as global capital returns to the asset class.
Focus on high-quality businesses in frontier emerging markets that can compound earnings over the long-term, positioned to benefit from domestic transformations within their local countries and potential sustained dollar weakness.
Optimistic about the year ahead, believing 2025 marked a significant inflection point for frontier emerging markets with potential for extended period of tailwinds. Expects strong fundamentals of portfolio companies to be rewarded as more investors turn attention to frontier emerging markets.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 10 2026 | 2025 Q4 | BCG.L, DSY.JO, FN, FRT.HM, MELI, SE | Dollar, E-Commerce, emerging markets, frontier markets, Latin America, Quality, underperformance, Vietnam |
SE BCG LN MELI DSY SJ FRT VN FN |
Multiple portfolio holdings operate in e-commerce including Sea Ltd.'s Shopee platform, MercadoLibre as Latin America's largest marketplace, and the broader digital transformation occurring in frontier… |
| 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 |
DollarDollar depreciated -9% against trading partners in 2025, worst year since 2017. De-dollarization trend accelerating as world shifts away from US. Reduced net dollar exposure from 25% to 8% following geopolitical tensions and superpower positioning concerns. |
Depreciation De-dollarization Reserves Geopolitical | |
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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 10, 2026 | Fund Letters | Scott Thomas | SE | Sea Limited | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | New York Stock Exchange | Competition, e-commerce, Fintech, Gaming, Margins, Southeast Asia | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | BCG LN | Baltic Classifieds Group PLC | Communication Services | Interactive Media & Services | Bull | New York Stock Exchange | AI, asset-light, Classifieds, Margins, network effects, Portals | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | MELI | MercadoLibre, Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | Competition, e-commerce, Fintech, Latin America, Margins, Payments | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | DSY SJ | Discovery Limited | Financials | Life & Health Insurance | Bull | New York Stock Exchange | banking, Incentives, Insurance, operating leverage, South Africa, Wellness | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | FRT VN | FPT Digital Retail JSC | Consumer Staples | Drug Retail | Bull | New York Stock Exchange | consolidation, earnings growth, Pharmacies, retail expansion, scale, Vietnam | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | FN | Fabrinet | Information Technology | Communications Equipment | Bull | New York Stock Exchange | AI, data centers, manufacturing, Networking, Optical, telecommunications | Login |
| TICKER | COMMENTARY |
|---|---|
| BCG.L | Baltic Classifieds Group plc cost us 1.4% after two profit warnings – albeit both modest – played into the narrative of online classifieds being disrupted by AI. We don't believe the disruption narrative has any relevance to these warnings, which relate to a larger than expected impact from a change to Estonian car tax legislation. |
| DSY.JO | Discovery Ltd., a South Africa-based insurance company operating in the health-care, life-insurance, short-term insurance, banking and wellness markets, was a top contributor to strategy performance for the quarter. The company's entrepreneurial suite of financial products is based on a loyalty model with shared benefits and cross-correlated variables. Clients earn loyalty rewards for making healthy lifestyle choices such as going to the gym and driving safely. The company has invested heavily in its offering and has at this point laid the groundwork and infrastructure for its operations going forward. Customer growth data emerging from Discovery's new bank venture in particular has been positive. We see the company as well positioned to reap the benefits of its investment in its business over the next several years. |
| FN | Fabrinet Information Technology 1.6 |
| FRT.HM | Vietnam-based FPT Digital Retail JSC was another of the strategy's top contributors. The company is the leading operator of a chain of pharmacies in Vietnam. FPT Digital Retail has invested heavily to outpace its competitors, who have struggled recently and have pulled back on growth. We see the company as having reached scale velocity—the ability to expand rapidly while staying on course and improving profitability. We think the company could experience positive earnings growth over the next several years. |
| MELI | E-commerce Volatility: turbulence in our e-commerce portfolio companies, Sea Ltd (Southeast Asia) and MercadoLibre (Latin America), amidst aggressive price wars. |
| 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. |
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