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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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SGA - Emerging Markets Growth 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (SGA - Emerging Markets Growth)

Primary Source Intelligence • Q3 2026 Letter Analysis

SGA - Emerging Markets Growth Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, SGA - Emerging Markets Growth. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-0.6%

YTD-12.1%

Annualized+3.4%

Positioning StanceCONSTRUCTIVE

Market CapLarge Cap

GeographyEmerging markets

Digest Analysis

Quick Take

"Extreme benchmark concentration and levered AI hardware momentum have eroded emerging market index diversification, creating historically compelling valuations in cash-generative secular compounders across financial inclusion, digital platforms, and essential infrastructure."

Executive Summary

SGA Emerging Markets Growth returned -0.6% net of fees in the third quarter of 2026, outperforming the MSCI EM Growth Net TR Index return of -3.6% and lagging the MSCI EM Net TR Index return of -0.4%. Year-to-date, the strategy has returned -12.1% net of fees. The portfolio demonstrated strong downside protection during the sharp July momentum unwind, outperforming the broader benchmark by over 7% net as speculative, levered AI hardware names declined significantly, before surrendering relative gains during the speculative rebound in August and September. Cash remained minimal with allocations deployed across high-conviction structural compounders. The macroeconomic environment was characterized by tighter financial conditions, elevated bond yields, volatile energy prices, and renewed monetary tightening. SGA highlights that broad passive emerging market indices have become dangerously concentrated, with Taiwan and Korea comprising nearly half the benchmark and three semiconductor giants accounting for roughly 30%. This dynamic has driven the correlation between the MSCI EM Index and U.S. semiconductor equities to two-decade highs, turning passive allocations into levered bets on AI CapEx rather than genuine EM diversification. Portfolio activity reflected disciplined rebalancing and valuation sensitivity. The team initiated new high-conviction positions in power electronics leader Delta Electronics and Indian port operator JSW Infrastructure, while adding to Taiwan Semiconductor Manufacturing Company on weakness. Proceeds were funded by trimming positions in mature holdings facing moderating growth, including Infosys, Wal-Mart de Mexico, and Unilever, alongside taking partial profits in Brazilian financial services platform XP after strong outperformance.

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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

78%

CautiousHigh

High Conviction (78%)

The portfolio exhibits high conviction by maintaining concentrated allocations in top holdings, such as a 13.0% position in TSMC, alongside decisive portfolio additions during market volatility. The manager explicitly details individual company theses and sizing rationale, although the strategy holds over 25 distinct names across multiple emerging jurisdictions.

Growth Outlook

65%

BearishBullish

Bullish (65%)

SGA maintains a constructive outlook on quality emerging market compounders, noting that portfolio valuation relative to the broader benchmark trades near decade lows. While near-term macro headwinds and rate volatility are acknowledged, the manager expects durable fundamentals and 18% three-year EPS growth to drive attractive absolute returns.

Risk Appetite

70%

DefensiveAggressive

Balanced (70%)

Capital remains fully deployed in high-quality equities, using intra-quarter market dislocations to initiate growth compounders like Delta Electronics and JSW Infrastructure. However, risk appetite is tempered by trimming mature, slower-growth names and avoiding speculative, highly levered AI hardware suppliers.

Capital Deployment

60%

De-riskingDeploying

Net Neutral (60%)

The strategy remained actively invested with cash at minimal levels, funding new position entries in Delta Electronics and JSW Infrastructure through internal portfolio trims in Infosys, Walmex, Unilever, and XP rather than raising net cash.

Forward Guidance

72%

CautiousExpansionary

Expansionary (72%)

Management explicitly states an active bias toward deploying capital into undervalued compounders whose fundamentals diverge from depressed multiples. They intend to fund high-conviction ideas by trimming slower-growing businesses and taking selective profits on outperformers.

Language Signal

68%

BearishBullish

Bullish (68%)

The commentary balances robust bullish terminology around compounding, durable moats, and record low valuations against warnings regarding leverage blowups, momentum risks, and macro rate pressure. Constructive fundamental language significantly outweighs risk-averse phrasing.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

The manager highlights elevated environmental risks, pointing to extreme retail leverage, hedge fund liquidations, rising global bond yields, and historically high correlation between emerging indices and U.S. semiconductors as evidence of market vulnerability.

Opportunity Density

75%

ScarceAbundant

Abundant (75%)

SGA sees a rich set of opportunities across neglected non-AI compounders in Latin America and Asia where multiples have severely compressed despite double-digit operational growth. The manager highlights compelling entry valuations across digital ecosystems, wealth platforms, and consumer franchises.

Time Horizon

82%

Short-TermLong-Term

Decade+ (82%)

The investment strategy focuses explicitly on a multi-year compounding horizon, underwriting business fundamentals and earnings growth over three-year forward windows. The manager deliberately looks past short-term quarterly swings and speculative market momentum.