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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Emerging markets surged 24.1% in Q2 2026, outpacing developed markets for the sixth straight quarter, but the rally was strikingly narrow. Three AI semiconductor mega-caps—TSMC, Samsung, and SK Hynix—accounted for over 75% of the index return, driving Korea up 88% and Taiwan 49%."
Emerging markets staged a powerful but strikingly narrow recovery in Q2 2026, with the MSCI Emerging Markets Index gaining +24.1% and outpacing developed markets for the sixth consecutive quarter. The rally was driven almost entirely by the AI infrastructure theme, concentrated in three North Asian semiconductor mega-caps: TSMC, Samsung Electronics, and SK Hynix, which reached a combined valuation of roughly $4 trillion and accounted for more than 75% of the index's return despite representing less than a quarter of its weight. Korea surged 88% and Taiwan 49%, while both markets surpassed China to become the index's largest countries. The advance was set against a backdrop of persistent geopolitical risk from the Iran war, which created fragile stability as oil retreated from above $110 to below $70 a barrel. The Fed's hawkish turn at quarter-end pushed out emerging markets easing cycles. Beyond the AI complex, the market was cautious: China declined -6.6%, Brazil fell -8.2%, energy gave back -9.6%, and consumer discretionary dropped -10.0%. The equal-weighted index returned just +9.5%, capturing less than 40% of the cap-weighted return, underscoring the extreme concentration of leadership.
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