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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Harding Loevner International Equity 2024 Q3 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q3 2024 Letter Analysis

Harding Loevner International Equity Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Harding Loevner International Equity. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

YTD+12%

Annualized+7.99%

Digest Analysis

Quick Take

"Harding Loevner outperformed in Q3 with strong Health Care and Japanese holdings, but continues to trail year-to-date due to momentum headwinds."

Executive Summary

Harding Loevner's International Equity composite returned 9.7% gross in Q3 2024, outpacing the MSCI ACWI ex-US Index's 8.2% gain, though year-to-date performance of 12.0% trails the benchmark's 14.7%. The quarter was marked by significant market shifts as central banks pivoted toward easing, with the Fed cutting rates by 50 basis points and ending the rate-hike cycle. China's late-quarter stimulus package drove a 20% surge in Chinese markets. The manager's Health Care holdings were particularly strong, led by Chugai Pharmaceutical, while Japanese stocks significantly outperformed. The letter extensively addresses the challenge of momentum investing, which has pressured fundamental investors over the past 18 months. Despite this headwind, the manager maintains their disciplined approach, citing concerns about momentum's lack of fundamental basis, high trading costs, and volatility. Portfolio actions included consolidating Indian bank holdings by adding to HDFC Bank while selling ICICI Bank, and exiting positions in BioNTech and Russian oil producer Lukoil. The manager remains committed to their quality-focused, diversified approach while acknowledging the ongoing challenges posed by momentum-driven markets.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

The manager demonstrates high conviction in their fundamental investment philosophy and process, explicitly rejecting momentum strategies despite recent underperformance. They make decisive portfolio moves like consolidating Indian banks and maintain clear position sizing with named holdings. The extensive discussion of their investment approach and risk limits shows strong conviction in their methodology.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager expresses cautious optimism about markets, noting positive developments like central bank easing and China stimulus, but also acknowledges ongoing challenges from momentum dynamics and geopolitical tensions. The tone is constructive but measured.

Risk Appetite

10%

DefensiveAggressive

Defensive (10%)

The portfolio maintains a defensive posture with relatively low exposure to US election risks and deliberate avoidance of momentum strategies. The manager emphasizes diversification limits and risk guidelines, suggesting a cautious risk appetite.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

The manager describes selective portfolio actions including adding to HDFC Bank and selling several positions, but these appear to be rotational moves rather than net deployment. Cash levels and overall exposure changes are not explicitly discussed, suggesting minimal net deployment activity.

Forward Guidance

0%

CautiousExpansionary

Cautious (0%)

The manager provides no clear directional bias for future actions, focusing instead on maintaining their disciplined approach and waiting for momentum reversals. The stance is neutral with emphasis on patience and process adherence.

Language Signal

15%

BearishBullish

Bearish (15%)

Language is balanced with some positive terms around opportunities and quality companies, but also significant discussion of risks, challenges, and market difficulties. The net balance is slightly positive but cautious.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

The manager identifies multiple specific risks including US election uncertainty, momentum reversals, geopolitical tensions, and currency volatility from carry trade unwinding. While not alarmist, they demonstrate clear awareness of various macro and market risks that could impact performance.

Opportunity Density

45%

ScarceAbundant

Selective (45%)

The manager suggests a selective opportunity environment, noting challenges from momentum dynamics and the need for patience. While they identify some attractive opportunities like HDFC Bank, the overall tone suggests a more challenging environment for fundamental investors requiring selectivity.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The manager emphasizes long-term fundamental investing and explicitly discusses their resistance to short-term momentum strategies. They reference multi-year and multi-decade investment horizons, and their willingness to hold through momentum headwinds demonstrates a patient, long-term approach.