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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Aikya's emerging markets fund underperformed in October despite positive returns, missing semiconductor momentum while maintaining quality and valuation discipline. The defensive portfolio outperformed in China corrections and benefited from Indonesian exposure, but faced headwinds from Latin American consumer slowdowns."
Aikya's Global Emerging Markets Fund posted positive returns in October but underperformed the benchmark due to minimal exposure to AI-driven semiconductor momentum in Taiwan and Korea. The fund's quality-focused approach relies on two key pillars: investing in high-quality companies at sensible valuations. While markets reached record highs driven by AI excitement around names like TSMC, SK Hynix, and Samsung, Aikya maintained valuation discipline despite believing in AI's long-term potential. The strategy benefited from Indonesian exposure through Bank Central Asia as sentiment toward the government improved. In China, the portfolio's defensiveness helped outperform during market corrections, with Centre Testing posting positive returns while names like Netease and Shenzhen Inovance declined. Latin American holdings showed mixed results, with Raia Drogasil and Banco de Chile advancing while Natura and FEMSA weakened due to consumer slowdowns in Brazil and Mexico. Management emphasizes that one-month performance is insufficient for meaningful conclusions, maintaining focus on long-term absolute returns with strong downside protection.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Bestinver manages moderately concentrated portfolios across regional strategies, with its top positions generally representing between 3% and 8% of assets. The manager expresses a highly declarative, disciplined value philosophy and maintains high-conviction positions in beaten-down sectors like European banks and cyclicals despite short-term headwinds.
Growth Outlook
The manager remains constructive on the medium-to-long term, particularly on European equities which have corrected to attractive valuation levels relative to the US. While acknowledging geopolitical risks and tariff uncertainties, they believe these conditions provide a fertile ground for disciplined value investing.
Risk Appetite
Bestinver is actively rotating capital into deeply discounted cyclical sectors like steel (ArcelorMittal) and European financials while trimming highly priced US holdings. Cash levels are kept around 7% for their main funds, signaling a risk-on attitude toward carefully selected equities.
Capital Deployment
The fund is actively rotating capital, selling down highly valued positions like Meta, Berkshire, and Aena to fund deployment into new long positions like Lloyds and ArcelorMittal. Net liquidity levels remain stable, indicating balanced capital deployment.
Forward Guidance
The investment team intends to aggressively leverage any market panic or volatility to purchase high-quality businesses at depressed prices. They explicitly highlight their shopping list and have recently deployed capital into several new positions such as Lloyds and ArcelorMittal.
Language Signal
The letters are dominated by positive value-investing terminology like 'safety margin,' 'compounding value,' 'attractive valuations,' and 'undervalued.' This bullish value signal is tempered by realistic discussions surrounding structural challenges in Europe and tariff risks in the US.
Perceived Risk
The manager clearly identifies macro threats like trade protectionism, rapid fiscal adjustments, and inflation/stagflation concerns. However, they perceive these risks as manageable cyclical events rather than systemic threats to their carefully selected portfolios.
Opportunity Density
The manager views the current environment of rapid positioning shifts and elevated volatility as a fertile landscape that is producing a high density of quality businesses at attractive prices across both Europe and select US segments.
Time Horizon
Bestinver consistently references a multi-year to permanent investment horizon (greater than five years), utilizing historical data to caution investors against short-term panic and highlighting the benefits of letting compounding play out.
