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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"The portfolio captured strong semiconductor gains driven by AI-fueled memory demand, with Samsung tripling quarterly profits, but the manager systematically trimmed IT winners on valuation discipline, redeploying into quality companies like Spotify trading at better entry points. They view the AI boom through a bottom-up lens, expecting durability to vary by competitive positioning, and caution that cyclical semiconductor patterns may reassert by 2028 despite near-term strength."
Harding Loevner's International Equity composite returned 13.2% gross in Q2 2026, slightly trailing the 14.7% MSCI ACWI ex US Index return, bringing year-to-date performance to 14.7% versus 14.0% for the index. The quarter was dominated by semiconductor stocks, with the IT sector surging 64% driven by AI-related demand for memory and logic chips. Samsung Electronics, the portfolio's largest contributor, saw profits nearly triple as DRAM and NAND prices jumped 80-90% quarter-over-quarter. The manager extensively analyzed whether the AI boom represents a bubble, concluding that durability will vary by company based on industry structure and competitive positioning. Demonstrating valuation discipline, they trimmed Samsung six times and other semiconductor holdings multiple times, selling 700 basis points of IT exposure to manage concentration risk despite strong performance. Proceeds were redeployed into companies like Spotify that can leverage AI to strengthen competitive moats. The manager remains constructive on semiconductor equipment suppliers and memory makers benefiting from rational capacity discipline, while cautioning that 2028 may see cyclical pressures reassert as the industry has never experienced five consecutive strong years. Key detractors included Shell on falling oil prices and AIA Group on regulatory concerns in Hong Kong.
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