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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Brandes International Equity Fund 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Brandes International Equity Fund)

Primary Source Intelligence • Q3 2026 Letter Analysis

Brandes International Equity Fund Quarterly Analysis

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

Fund Returns

QTD+3.1%

YTD+9.56%

Annualized+8.62%

Positioning StanceCONSTRUCTIVE

GeographyEurope, Emerging markets, LatAM

Digest Analysis

Quick Take

"Constructive on durable European and emerging-market compounders undergoing cyclical inflections, rotating out of fully-valued semiconductor holdings like Samsung into discounted leaders including JBS and Nintendo."

Executive Summary

The Brandes International Equity Fund returned 3.10% net of fees in the third quarter of 2026, outperforming the MSCI EAFE Index benchmark return of 0.81%, while trailing the MSCI EAFE Value Index return of 4.27%. For the year-to-date period through September 30, 2026, the fund gained 9.56% net of fees, slightly trailing the benchmark's 10.33% advance. Relative performance during the quarter benefited from a sharp rotation within technology away from artificial intelligence infrastructure hardware toward enterprise software and IT services, alongside strong contributions from select emerging-market and pharmaceutical holdings. Macroeconomic crosscurrents remained volatile across the year, marked by shifting market leadership, geopolitical conflicts, persistent inflation, and elevated valuation dispersion. While AI-related capital expenditure dominated market momentum earlier in the year, the third quarter saw value factors regain relative strength as investors reassessed hardware disruption risks. In response, the portfolio maintains substantial active weights in health care, consumer staples, and consumer discretionary franchises possessing durable demand and pricing power, while holding defensive underweight allocations in financials, industrials, and hardware technology. Portfolio turnover during the quarter was active. The fund initiated new positions in Brazilian animal-protein producer JBS and Japanese entertainment franchise leader Nintendo, both offering mispriced cash flow generation and margin recovery. Conversely, the manager eliminated South Korean giant Samsung Electronics, Dutch specialty ingredients maker DSM-Firmenich, and German logistics provider DHL after each reached intrinsic value estimates, leaving the portfolio with zero direct exposure to South Korea while reallocating capital into Latin America and China.

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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

65%

CautiousHigh

Moderate (65%)

The manager maintains disciplined position sizing across international equities with top holdings clustered near 2.0% to 3.1% of assets, reflecting a diversified portfolio rather than concentrated high-conviction bets. Capital deployment behavior demonstrates clear discipline, exiting major winners like Samsung Electronics upon hitting intrinsic value targets while gradually phasing into turnarounds like JBS.

Growth Outlook

55%

BearishBullish

Neutral (55%)

The manager notes unusually wide valuation dispersion across global markets created by geopolitical conflicts, inflation, and disruptive technologies. While constructive on defensive holdings and cyclical recovery names trading with a margin of safety, broad market language acknowledges ongoing volatility and selective risks across capital-intensive sectors.

Risk Appetite

60%

DefensiveAggressive

Balanced (60%)

Portfolio positioning leans net long across equity markets with active new commitments to cyclical turnarounds in protein production and consumer entertainment. However, risk appetite is counterbalanced by conscious underweights to benchmark-heavy financials and semiconductor hardware, alongside gradual pacing in emerging-market initiations.

Capital Deployment

60%

De-riskingDeploying

Net Neutral (60%)

The fund engaged in elevated reallocation activity during the quarter, deploying capital into two new positions while completely harvesting three fully-valued positions, maintaining an overall balanced net investment exposure.

Forward Guidance

65%

CautiousExpansionary

Expansionary (65%)

The portfolio team exhibits an active deployment bias, establishing new positions in Nintendo and JBS while adding to software leaders like SAP during market pullbacks. Guidance points toward ongoing selective deployment into companies with durable brands and depressed earnings rather than chasing momentum.

Language Signal

62%

BearishBullish

Balanced (62%)

Commentary balances constructive descriptors such as 'attractive opportunity,' 'recovery potential,' and 'margin of safety' against measured risk vocabulary addressing 'softer consumer conditions,' 'regulatory environment,' and 'litigation risk.' The overall tone is measured and grounded in classic fundamental value investing.

Perceived Risk

58%

Low RiskElevated

Moderate Risk (58%)

The letter discusses specific macro headwinds including Middle Eastern geopolitical conflict, rising energy costs, sticky inflation, and country-specific regulatory uncertainties across emerging markets like Mexico, alongside execution risks in luxury and animal protein.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

The manager identifies fertile hunting grounds in Europe and select emerging markets like Mexico and Brazil, driven by wide valuation spreads between AI momentum winners and overlooked value franchises. Pockets of opportunity remain particularly rich within health care, consumer staples, and enterprise software.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Investment rationale is oriented around multi-year compounding cycles spanning two to five years, explicitly emphasizing patient capital allocation through hardware product transitions, cloud migrations, and agricultural commodity downcycles.