Global economic data released during February continued to point to a world economy that is expanding, albeit unevenly across regions. Growth remains resilient rather than accelerating, with activity supported by steady consumer demand, stabilising financial conditions and easing inflation pressures in many economies.
The United States remains the principal anchor of global growth. Labour markets continue to hold firm, and services activity remains robust, reinforcing the narrative of a “soft landing”. While inflation has moderated from its peak, it remains sufficiently persistent to keep the Federal Reserve cautious, leaving markets uncertain about the precise timing of policy easing. Europe’s economy remains softer by comparison, with manufacturing still subdued, although recent sentiment surveys suggest the pace of weakness may be stabilising.
Against this backdrop, emerging markets continue to display comparatively stronger growth dynamics. Many emerging economies moved earlier in tightening monetary policy cycles, leaving real interest rates relatively attractive and allowing policymakers greater flexibility as inflation pressures stabilise. Asia in particular continues to act as a central engine of global growth.
Equity markets during February reflected a gradual evolution in leadership rather than a dramatic shift in direction. Global equities broadly advanced, but performance became more regionally and sectorally differentiated. For much of the past decade, market returns were dominated by US mega-cap technology. While the sector remains influential, February suggested a gradual broadening of participation across markets and sectors.
Within emerging markets, Asia ex-Japan delivered some of the stronger returns globally, reflecting improving investor sentiment and renewed capital flows into the region. India’s market performance was more measured during the month following a prolonged period of underperformance, with valuations prompting a period of consolidation rather than continued acceleration. China’s market dynamics remain volatile, though policy support and deeply discounted valuations have begun to attract selective investor interest.
Latin America delivered mixed results. Brazil and several regional markets continue to benefit from attractive real yields and improved macro stability, though political uncertainty and fiscal debates continue to temper investor enthusiasm.
Overall, February reinforced a key theme for global markets: growth remains intact but increasingly differentiated across regions. For emerging markets, this environment can be constructive. As global investors become more selective and begin to differentiate more clearly between economies based on policy credibility, growth dynamics and valuation, emerging markets often benefit from the renewed dispersion of capital flows.
The Fund returned 5.37% in February, with performance driven primarily by our exposure to North Asia, particularly Taiwan and South Korea. Those two markets were the clear engines of returns and more than offset weakness in China and softer contributions elsewhere.
Taiwan was the largest contributor, adding approximately 2.81%. The main driver was our exposure to the semiconductor and AI hardware ecosystem, where holdings across chip manufacturing, testing, connectivity and server-related infrastructure performed strongly. This remains one of the most important structural themes in the portfolio and was again a major source of alpha during the month. South Korea was the second-largest contributor, adding roughly 2.13%. Performance came from a combination of technology exposure and strength in industrial businesses linked to power equipment, capital goods, defence and broader manufacturing recovery. Korea continues to offer a useful blend of cyclical and structural growth opportunities, and that was reflected in February’s results.
India also contributed positively, adding around 0.47%. Returns there were broader-based and less concentrated, with support coming from domestic cyclicals, financials, infrastructure and healthcare. India did not drive the overall result in the same way as Taiwan or Korea, but it remained a constructive contributor.
Other Asian markets such as Malaysia, Thailand, the Philippines and Singapore also added modestly to returns, helping broaden out performance beyond the Fund’s largest country positions.
The principal drag on performance came from China, which detracted approximately 0.95%. Weakness was concentrated across parts of the internet, consumer and technology complex. While valuations in China remain compelling in places and policy support has become more visible, investor confidence is still fragile and market leadership remains inconsistent.
Brazil was also slightly negative overall. There were positive contributions from selected industrial, consumer and real estate holdings, but these were offset by weakness in more discretionary areas of the market.
Overall, February’s attribution reflected the current shape of the portfolio clearly. Performance was led by holdings exposed to AI infrastructure, semiconductors, industrial upgrading and electrification, while more domestically sensitive and sentiment-driven areas, particularly in China, lagged. In that sense, the month was a good example of how emerging market leadership is becoming more selective, with returns increasingly concentrated in markets and sectors where structural earnings growth remains strongest.
