Harding Loevner's Emerging Markets Equity composite experienced a modest downturn in the first quarter of 2026, closely tracking the performance of the MSCI Emerging Markets Index. This period saw strategic acquisitions and re-investments across various sectors, reflecting a dynamic approach to portfolio management amidst evolving global economic conditions. The fund's decisions were driven by detailed analyses of market trends, company-specific developments, and geopolitical factors.

Key investment actions included the acquisition of Kazatomprom, a major uranium producer poised to gain from the renewed global interest in nuclear energy, fueled by the escalating demand for power from artificial intelligence data centers. Additionally, the fund strategically re-entered positions in Mercadolibre and WuXi AppTec, recognizing improved valuations and reduced risks. The commentary also highlighted CATL's pioneering work in energy storage solutions, emphasizing its critical role in advancing sustainable energy infrastructure through innovative battery technologies.

Strategic Investments and Market Performance

Harding Loevner made several calculated moves in the first quarter of 2026, demonstrating a forward-looking investment philosophy. A notable acquisition was Kazatomprom, a prominent player in the uranium sector. This investment was predicated on the growing global demand for nuclear power, which is experiencing a resurgence as countries seek reliable and clean energy sources. The escalating energy requirements of AI data centers, in particular, are driving this renewed interest, positioning uranium producers like Kazatomprom for significant growth. This strategic entry aims to capitalize on long-term energy trends and the increasing importance of nuclear power in the global energy mix.

The fund's performance during this period was also shaped by broader market movements. The Emerging Markets Equity composite registered a slight decrease of 0.29% gross of fees, closely mirroring the MSCI Emerging Markets Index's 0.10% decline. This indicates that the fund's strategy largely aligned with overall market trends in emerging economies. The market saw initial gains in the first two months, which were subsequently offset in March by the emergence of the Middle East conflict. This geopolitical event prompted investors to reassess its potential impact on global economic stability and commodity prices, leading to a period of volatility and adjustments across various market segments.

Technological Innovation and Portfolio Rebalancing

Beyond traditional energy, Harding Loevner also focused on companies driving technological innovation in sustainable energy. CATL, a leader in battery technology, was a key area of interest due to its significant advancements in solving industrial battery storage challenges. CATL has been instrumental in enhancing electric vehicle (EV) batteries and developing robust energy storage systems, making large-scale power storage feasible for major utilities. This focus underscores the fund's commitment to companies that are not only financially sound but also contribute to long-term environmental sustainability and technological progress in critical sectors.

In a strategic rebalancing effort, the fund re-invested in Mercadolibre, an e-commerce giant, after its shares traded significantly below their previous exit price. This re-entry was justified by the attractive upside potential, even with modest improvements in profit margins, indicating a strong belief in the company's long-term value. Similarly, WuXi AppTec, a leading Chinese contract research organization, was repurchased. This decision followed a decrease in the perceived risk of disruption from the BIOSECURE Act, coupled with strong business momentum and favorable valuations at approximately 17 times forward earnings. These re-entries reflect a meticulous risk-reward assessment and a proactive approach to leveraging market dislocations for future gains.