Q1 2026 Fund Commentary

Commentary and opinions are provided by JPMorgan Asset Management (Canada) Inc..

Market commentary

The first quarter of 2026 began with sustained emerging markets outperformance before a sharp Middle East conflict-led reversal in March. The quarter’s key themes included a volatile geopolitical backdrop culminating in a late-quarter risk-off move tied to the energy shock, a continuation of the artificial intelligence (AI)-driven memory upcycle that supported select North Asian exposures and metals strength in Latin America.

In Asia, South Korea and Taiwan led early gains on AI and memory optimism, while parts of Southeast Asia were supported by domestic demand resilience. Mainland China and Hong Kong held up better than regional peers during the March sell-off as manufacturing data improved. India underperformed the region early in the quarter because of foreign selling, currency weakness and oil sensitivity.

In the Middle East, Africa and Europe, the quarter’s strong start gave way to March drawdowns amid the conflict in the Middle East and spike in oil prices. Latin America was a relative outperformer in emerging markets, benefiting from commodity exposure and currency resilience in key markets.

Performance

Lotes Co. Ltd. contributed to the Fund’s performance on strong AI server demand and new product launches, with management highlighting growth drivers from new cable products. Itauu Unibanco Holding SA contributed to performance because of resilient earnings and improving sentiment toward Brazilian financials and a more constructive outlook for the domestic market.

Stock selection in the information technology sector contributed to performance as sentiment improved toward AI and data-centre-linked enablers. Select exposures in Brazil also contributed to performance as financials advanced on resilient earnings.

No exposure to Samsung Electronics Co. Ltd. detracted from the Fund’s performance as the company’s stock rallied on improving memory pricing and AI-driven demand. The Fund doesn’t hold Samsung Electronics because of environmental, social and governance (ESG) considerations, as the company’s ESG characteristics don’t align with the Fund’s investment philosophy. MakeMyTrip Ltd. detracted from performance following weaker air segment growth, higher financing costs and increased market concern around longer-term disruption from AI.

Stock selection in the financials sector detracted from performance, led by exposures in India as higher oil prices and elevated risk aversion amid geopolitical developments weighed on sentiment. An underweight allocation to Saudi Arabia also detracted from performance as that market remained resilient because of higher oil prices and continued crude oil export flows.

Portfolio activity

The sub-advisor added to the Fund a holding in Fuyao Glass Industry Group Co. Ltd. because of the company’s strong market position, economies of scale and the increasing adoption of high-value-added glass products. The sub-advisor increased the Fund’s position in Eugene Technology Co. Ltd. to take advantage of opportunities in the AI-driven memory upgrade cycle.

The sub-advisor sold the Fund’s holding in Hefei Meiya Optoelectronic Technology Inc. as the company’s dental segment shifted into a lower growth phase. The sub-advisor reduced the Fund’s position in Samsung Fire & Marine Insurance Co. Ltd. to reflect elevated valuations.

Outlook

In the sub-advisor’s view, China remains relatively attractive given its insulation from Middle East-related shocks, supported by greater energy diversification and a large domestic demand base. However, market performance has been uneven across sectors, with dispersion driven by intensifying competition and uncertainty as the AI landscape evolves. Opportunities may be increasingly concentrated in globally competitive industrial exporters and select consumer areas with more idiosyncratic growth drivers.

In the sub-advisor’s view, investment opportunities in India are improving as the recent decline reflected less about the AI trade and more about fundamentals. Valuations have come down and select areas – particularly banks – are now looking more compelling.