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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Harding Loevner International Small Companies Equity. This analysis is provided for institutional research purposes only and is not investment advice.
"The fund returned 10.3% gross in Q2 2026, outperforming the 9.8% benchmark, driven by semiconductor and industrial holdings benefiting from AI data center demand. The manager is positioning for physical AI applications in robotics and automation, adding Japanese quality-growth companies at improved valuations including Harmonic Drive Systems, Japan Elevator Service, and Rakus."
Harding Loevner's International Small Companies Equity composite returned 10.3% gross in Q2 2026, slightly ahead of the 9.8% benchmark gain, though year-to-date performance of 5.9% lagged the index's 9.4% return. The portfolio benefited from strong stock selection in Industrials and an overweight in Information Technology, which rose over 40% as semiconductor suppliers to AI data centers projected significant earnings gains. The manager is positioning the portfolio to benefit from physical AI applications expanding beyond digital uses into robotics, automation, and industrial equipment. Key holdings include Harmonic Drive Systems for robotic components, MISUMI Group for automation parts, and Silergy for automotive and data center semiconductors. In Japan, prolonged corporate governance-driven value rallies have created opportunities to add high-quality businesses at more reasonable valuations, including Japan Elevator Service, Rakus, and M3. The manager added exposure to mining automation through Ferreycorp and continues seeking attractively priced, quality-growth companies globally. Portfolio risks include AI disruption concerns for software holdings and geopolitical tensions affecting commodities and shipping.
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