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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Driven by a sharp rebound in enterprise software holdings and timely additions to IT hardware names like Lenovo and SK hynix, while reallocating capital out of fully valued cyclicals and impaired pharmaceutical pipelines."
Harding Loevner Global Equity delivered a +3.54% net return (+3.67% gross) in the third quarter of 2026, outperforming the benchmark MSCI All Country World Index return of +1.69% by 185 basis points net. Year-to-date through September 30, 2026, the strategy returned +8.08% net of fees compared to +13.37% for the index. Relative outperformance during the quarter was driven predominantly by strong stock selection in Information Technology, where software and services holdings rebounded and timely opportunistic hardware purchases added value, alongside robust selection in the United States and Emerging Markets. The portfolio closed the quarter holding 2.3% in cash, with its Information Technology allocation matching the index at 33.4% and an overweight posture in Emerging Markets at 19.1% versus 12.0% for the benchmark. The macroeconomic environment was characterized by rising oil prices, firming 10-year Treasury yields surpassing 5%, and monetary tightening by three major central banks. Despite elevated discount rates, corporate earnings expanded robustly, led by unprecedented corporate spending on artificial intelligence infrastructure exceeding $750 billion in 2026, alongside an energy windfall driven by crude averaging $103 per barrel. Harding Loevner emphasizes that while incremental margins for hardware providers remain cyclically elevated at 75% to 80%, competitive dynamics and potential capital expenditure digestion argue for deliberate cross-sector diversification into secular compounders that do not rely on AI infrastructure spending. Portfolio activity was marked by capital reallocation from fully valued holdings or impaired theses into attractively priced opportunities created by market volatility. The fund initiated new positions in personal computer and enterprise server manufacturer Lenovo, South Korean memory producer SK hynix, power-management supplier Delta Electronics, and biopharmaceutical developer Neurocrine Biosciences, while funding these additions through complete exits of Atkore following an acquisition bid, John Deere on peak valuation, AstraZeneca due to clinical trial setbacks, and Booking Holdings on generative AI disruption concerns.
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