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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 Q3 Investor Letter | Buyside Digest

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

Primary Source Intelligence • Q3 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-3.9%

YTD+17.7%

Annualized+7.2%

Positioning StanceCONSTRUCTIVE

Market CapLarge Cap

GeographyEmerging markets, Asia, LatAM

Digest Analysis

Quick Take

"Constructive on secular AI infrastructure demand across Asian compute and packaging leaders, initiating positions in ASPEED Technology, Elite Material, and Zhongji Innolight while shedding cyclical banking and retail positions."

Executive Summary

During the third quarter of 2026, the Emerging Markets Growth strategy generated a net return of -3.9%, underperforming the MSCI Emerging Markets Index net benchmark return of -0.4%. Year-to-date through September 30, 2026, the portfolio advanced 17.7% net of fees compared to 23.4% for the benchmark. Relative results were primarily pressured by dispersion within AI and semiconductor exposures across China and Korea, alongside an underweight stance toward value- and defensive-oriented market sectors such as energy, health care, and materials which led broader market gains. At the close of the period, the fund maintained an active share of 60%, a cash balance of 1.7%, and top ten portfolio concentration representing 49.7% of assets. The macroeconomic environment was shaped by rising developed market interest rates, a 30% increase in Brent crude oil prices, and an abrupt July sell-off across semiconductor equities driven by investor debates surrounding artificial intelligence capital spending durability and geopolitical friction. Regionally, the portfolio experienced strong contributions from businesses located in Kazakhstan and Argentina, while holdings in China and Korea served as the primary performance detractors. Emerging markets as an asset class underperformed U.S. equities for the first time since 2024, accompanied by value strategies outperforming growth strategies by the widest margin recorded since the first quarter of 2022. Portfolio turnover over the trailing 12 months stood at 63%, reflecting proactive capital reallocation toward structural AI supply chain beneficiaries exhibiting pricing power and multi-year order visibility. The team initiated new long positions in ASPEED Technology, Elite Material, Samsung Electro-Mechanics (SEMCO), Shanghai Conant Optical, and Zhongji Innolight. To fund these opportunities and maintain valuation discipline, the fund completed full exits of Al Rajhi Bank due to geopolitical headwinds, COSMAX following extended multiple expansion, Full Truck Alliance amid regulatory ambiguity, and HDFC Life Insurance owing to distribution frictions.

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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

74%

CautiousHigh

High Conviction (74%)

The portfolio maintains high concentration with 45 total holdings and top 10 positions comprising 49.7% of assets, led by conviction long allocations in TSMC (11.6%) and Samsung Electronics (9.8%). Management exited four positions completely while selectively deploying capital into specialized supply chain enablers, reflecting decisive action despite acknowledging broader geopolitical volatility.

Growth Outlook

65%

BearishBullish

Bullish (65%)

The team holds a constructive perspective on long-term secular growth equities, arguing that the portfolio trades at 11 times forward earnings against 40% estimated five-year annual earnings growth. However, near-term caution is expressed regarding short-term macro skittishness, rising interest rates, energy inflation, and ongoing AI spending debates.

Risk Appetite

70%

DefensiveAggressive

Balanced (70%)

Capital remains aggressively deployed into cyclical semiconductor and AI infrastructure suppliers, running with a minimal 1.7% cash drag. Risk appetite is tempered by the deliberate shedding of exposure in conflict zones such as Saudi Arabia and exiting companies with shifting regulatory barriers.

Capital Deployment

68%

De-riskingDeploying

Net Neutral (68%)

Cash remains low at 1.7% as management actively deployed capital into five new portfolio additions funded by the complete liquidation of four legacy holdings and selective profit taking.

Forward Guidance

72%

CautiousExpansionary

Expansionary (72%)

Management demonstrated an active forward deployment bias by initiating five new equity positions across the hardware supply chain following market pullbacks in July. They signaled an ongoing intent to capitalize on price-to-value dislocations rather than following backward-looking passive index weightings.

Language Signal

62%

BearishBullish

Balanced (62%)

The letter balances positive terminology regarding pricing power, earnings revisions, long-term agreements, and secular growth with notable risk language including component shortages, severe semiconductor sell-offs, and geopolitical war disruptions.

Perceived Risk

64%

Low RiskElevated

Moderate Risk (64%)

The letter outlines concrete market-wide risks, including developed market rate increases, a 30% spike in oil prices, export trade restrictions on Chinese chip manufacturing, and Middle Eastern geopolitical conflict.

Opportunity Density

73%

ScarceAbundant

Abundant (73%)

The managers emphasize an attractive opportunity set emerging outside mega-cap indices, highlighting that AI monetization and high-margin supplier bottlenecks are surfacing in companies diluted or absent in traditional emerging market benchmarks.

Time Horizon

82%

Short-TermLong-Term

Decade+ (82%)

Portfolio construction explicitly adheres to an expected holding period of 5+ years, accompanied by low annualized turnover of 23% and five-year earnings growth projections. Management repeatedly prioritizes multi-year supply contracts over quarterly delivery timing noise.