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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Sands Capital Emerging Markets Growth Fund 2026 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Sands Capital Emerging Markets Growth Fund)

Primary Source Intelligence • Q2 2026 Letter Analysis

Sands Capital Emerging Markets Growth Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Sands Capital Emerging Markets Growth Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+29.1%

YTD+22.5%

Annualized+7.2%

Positioning StanceNEUTRAL

Market CapLarge Cap

Digest Analysis

Quick Take

"Driven by AI infrastructure businesses as memory shortages broadened from HBM into conventional DRAM and NAND. Sequential memory price increases of 60-90% reflect structural, multiyear supply constraints."

Executive Summary

Sands Capital Emerging Markets Growth delivered its second-best quarter of absolute investment results on record, returning 29.1% net in Q2 2026, driven primarily by AI infrastructure businesses including SK hynix, Samsung Electronics, and Taiwan Semiconductor. The memory shortage broadened beyond high-bandwidth memory into conventional DRAM and NAND, with sequential price increases of 60-90% as AI inference and agentic workloads increase demand across the memory stack. Management views the supply-demand imbalance as structural and multiyear, with meaningful capacity additions difficult before H2 2027. The portfolio continued to broaden semiconductor exposure, adding Chroma ATE, Hyosung Heavy Industries, Montage Technology, and SK Square, while also tactically adding to cyclically oriented Indian businesses given improving valuations and macroeconomic resilience. China internet stocks lagged as investors rotated into AI infrastructure, though Alibaba's cloud revenue growth accelerated to 38% year-over-year. Despite the strong quarter, the portfolio ended trading at 13 times forward earnings, one of its lowest absolute valuation levels and lowest premiums to the MSCI EM. Management believes the portfolio's high earnings growth expectations combined with historically low valuations create an attractive setup for multiyear investors.

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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 portfolio demonstrates high-moderate conviction through its concentrated structure of 44 businesses with top ten holdings representing 52% of assets. Management provides specific position sizing (SK hynix 9.4%, Samsung 9.0%, TSMC 11.1%, SK Square 3.8%, MediaTek 3%) and discusses individual holdings with clear thesis articulation. The letter explains why MediaTek is held at 3% to balance opportunity and operational risk, demonstrating thoughtful position sizing. However, the portfolio is more diversified than extreme conviction funds (44 vs. 10-15 positions), and some hedging language exists around execution risks and market uncertainties. The score reflects strong conviction in named positions with clear thesis support, but not the extreme concentration of single-thesis funds.

Growth Outlook

60%

BearishBullish

Neutral (60%)

Management expresses a constructive market outlook, particularly for AI infrastructure and emerging markets. The letter describes the opportunity set as shifting with technology and geopolitics creating new business spaces and sources of durable earnings growth. India is characterized as having an improving macroeconomic backdrop with more attractive valuations. However, the outlook is balanced with acknowledgment of risks in China internet stocks and questions about AI's impact on software and internet margins. The tone is selectively optimistic rather than broadly bullish.

Risk Appetite

55%

DefensiveAggressive

Balanced (55%)

The portfolio demonstrates moderate risk-on positioning through continued deployment into AI infrastructure and semiconductor businesses, with new positions in Chroma ATE, Hyosung Heavy Industries, Montage Technology, and SK Square. Late-quarter tactical additions to Indian cyclicals signal willingness to add exposure. However, the 2.2% cash position and selective approach to China internet stocks (maintaining but not adding) shows measured rather than aggressive risk appetite. The portfolio remains concentrated at 44 businesses with top ten holdings at 52%, indicating conviction but not maximum leverage.

Capital Deployment

35%

De-riskingDeploying

Net Neutral (35%)

The portfolio shows moderate net deployment activity during the quarter. Four new positions were completed (Chroma ATE, Hyosung Heavy Industries, Montage Technology, SK Square) and three positions were sold (ASML, Dino Polska, FPT). Late-quarter tactical additions to Indian cyclicals indicate selective deployment. However, cash ended at 2.2% with no specific data on the starting cash level, limiting visibility into net deployment magnitude. The letter describes 'continued to broaden' exposure rather than aggressive deployment language. Trailing 12-month turnover of 58% is elevated but includes both buys and sells. The activity suggests selective, moderate deployment rather than aggressive cash reduction.

Forward Guidance

45%

CautiousExpansionary

Neutral (45%)

Management signals selective deployment bias, stating they are positioned to 'go where we believe the growth will be' and that the environment 'rewards research depth and adaptability.' The letter describes continuing to broaden AI infrastructure exposure while also looking beyond AI for durable earnings growth. However, the guidance is measured rather than aggressive, emphasizing the need to 'act more quickly when new information alters the facts' rather than broad-based deployment. The tactical additions to India late in the quarter suggest opportunistic rather than systematic deployment.

Language Signal

50%

BearishBullish

Balanced (50%)

The letter balances opportunity language with risk acknowledgment. Positive language includes 'attractive setup,' 'compelling multiyear margin expansion opportunity,' 'well positioned,' 'structural advantages,' and 'durable earnings growth.' Risk language includes 'execution risk,' 'concerns,' 'headwinds,' 'challenges,' 'questions about competition and margins,' and 'new risks.' The discussion of AI infrastructure is constructive but measured, while China internet commentary is cautious. India discussion is increasingly positive. Overall, the language is balanced between opportunity identification and risk awareness, with a slight lean toward constructive framing.

Perceived Risk

55%

Low RiskElevated

Moderate Risk (55%)

Management identifies several specific risks with meaningful discussion. AI infrastructure businesses face questions about competition, margins, and long-term value creation in software and internet segments. Memory supply constraints are described as structural through at least H2 2027. China internet stocks face ongoing debate about AI positioning and weak consumption. The letter acknowledges execution risk in MediaTek's custom chip development and notes that 'the pace of change is unusually fast.' Geopolitical risks are mentioned including U.S.-Iran tensions and BYD's addition to the Section 1260H list. However, risks are presented as manageable within the investment framework rather than systemic threats. The tone is cautious but not alarmed, with risks discussed as factors requiring active management rather than reasons to de-risk broadly.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

Management describes a rich but evolving opportunity set. The letter states 'where we find durable earnings growth may look different from where we found it in the past,' indicating new opportunities emerging. Four new positions were added during the quarter across semiconductors, power equipment, and interconnect solutions. India is characterized as having 'structural advantages that we believe the market may be underappreciating' with valuations 'more attractively valued than it has been in several years.' The discussion of AI infrastructure expanding beyond memory into power, cooling, and testing suggests broadening opportunity. However, the letter also notes some areas like China internet face headwinds and questions. Overall, the tone suggests selective abundance rather than broad-based opportunity scarcity.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The portfolio demonstrates a multi-year investment horizon with expected holding period of 5+ years and trailing 12-month turnover of 58% (which is elevated but includes forced sales and tactical repositioning). Management discusses structural, multiyear memory shortages extending through at least H2 2027, global transformer supply constraints through at least 2030, and India's long-term structural advantages. The letter emphasizes 'our long time horizon remains an advantage' and describes seeking businesses that can benefit from structural change. However, the elevated turnover and statement that 'the pace of change requires us to act more quickly when new information alters the facts' suggests some willingness to adjust on shorter timeframes when thesis changes. The score reflects a genuine multi-year orientation with tactical flexibility rather than permanent capital patience.