Q2 2026 Fund Commentary

Commentary and opinions are provided by Keyridge Asset Management.

Market commentary

The conflict in the Middle East, and its effect on supply chains and interest rates, was the most significant macroeconomic factor for international equities over the quarter. Risk appetite had reached a low at the end of the first quarter, and growing confidence in a resolution drove a strong rebound in international equity markets, with sentiment improving as the quarter progressed.

Performance

At the sector level, an overweight allocation to the information technology sector contributed to performance, led by semiconductors and semiconductor equipment. Security selection in the energy, industrials and information technology sectors also contributed to performance.

Samsung Electronics Co. Ltd. contributed to the Fund's performance. In the sub-advisor's view, artificial intelligence (AI) is driving strong demand for memory products, and as a leading supplier of DRAM, NAND and high-bandwidth memory, Samsung Electronics has benefited from rising prices as demand exceeds supply, which supports both revenue and margins. Taiwan Semiconductor Manufacturing Co. Ltd. also contributed to performance. The company holds a leading position in logic foundry services, and AI has increased demand for the advanced chips it supplies to global customers.

Coloplast A/S detracted from the Fund's performance. In the sub-advisor's view, revenue growth was marginally weaker than expected, with softer demand in China and the U.S., while higher cost inflation weighed on margins. Tencent Holdings Ltd. also detracted from performance. After strong gains in the prior year, the company outlined plans to invest in building AI capabilities across its platforms, which the sub-advisor expects to result in profit growth trailing revenue growth.

Portfolio activity

The sub-advisor increased DCC plc, CaixaBank S.A., BNP Paribas S.A. and Nippon Sanso Holdings Corp. and reduced Samsung Electronics, Nabtesco and Epiroc AB.

Outlook

In the sub-advisor's view, global economies have continued to perform well despite the conflict in the Middle East, with corporate earnings growing at healthy rates. Much of this has been driven by the information technology sector, although growth has broadened across other sectors, which the sub-advisor believes may benefit international equities.

The sub-advisor is monitoring supply-chain risk closely because disruptions to the supply of oil can affect many sectors, whether oil is used directly in manufacturing or indirectly as an energy source. The sub-advisor is also watching inflation and the potential for higher interest rates, which could support sectors such as banks while weighing on interest-rate-sensitive sectors such as utilities and real estate.