In the second quarter of 2026, the Nomura International Core Equity Fund Institutional Class shares showcased a commendable performance, outperforming its designated benchmark, the MSCI ACWI ex USA Index (net). This achievement was primarily driven by astute stock selection across various sectors, demonstrating the fund's strategic investment approach in a dynamic global market.
During this period, international equities, as measured by the MSCI All Country World Index (ACWI) ex USA Index, registered a net return of 14.5% in US dollar terms. A significant contributor to this positive trend was the technology sector, which emerged as the leading performer of the quarter. The fund's success can be largely attributed to its strategic allocations and careful stock choices within key industries.
A detailed analysis of the fund's performance reveals that stock selection within information technology, materials, and healthcare sectors was particularly impactful, generating the most substantial positive returns. Conversely, some negative contributions were observed from selections within the real estate and communication services sectors, which partially offset the overall gains.
The robust performance of South Korean memory semiconductor manufacturers, specifically SK Hynix and Samsung Electronics, played a crucial role in the fund's success. Their continued strong showing reflected upward revisions in earnings expectations, indicating a solid fundamental basis, while their valuation re-rating remained limited, suggesting potential for future growth. This highlights the fund's ability to identify and capitalize on companies with strong underlying performance and favorable market conditions.
Looking ahead, the market anticipates that a de-escalation of geopolitical tensions and a reduction in bond yields, propelled by easing stagflationary pressures, will continue to foster a broad risk-on sentiment. This environment is expected to encourage further rotation towards international markets, creating new opportunities for globally diversified funds. The Nomura International Core Equity Fund is strategically positioned to leverage these evolving market dynamics, with a continued focus on key themes. Several positive trends are expected to remain compelling, including the ongoing development and expansion of AI infrastructure, increased defense spending, and the global push for energy independence. These areas are likely to offer sustained growth prospects, aligning with the fund's forward-looking investment strategy.
The fund's strategic exposure to AI infrastructure, industrials, and healthcare underscores its commitment to targeting high-quality companies that possess both cyclical and structural growth potential. This is particularly evident in its focus on North Asia and select oversold names, which are believed to offer attractive entry points and significant upside. However, the investment landscape is not without its risks. Potential challenges include underperformance in commodity-exporting countries, economic uncertainties in regions like China, Hong Kong, and Brazil, and sector-specific headwinds. Therefore, continuous monitoring of valuation re-ratings and macroeconomic shifts will remain paramount for managing risks and identifying new opportunities.
In conclusion, the Nomura International Core Equity Fund's strong performance in the second quarter of 2026 was a testament to its disciplined investment strategy and sector-specific expertise. By effectively navigating market complexities and identifying lucrative opportunities, particularly in the thriving technology sector and emerging themes like AI, the fund delivered significant value to its investors. The outlook remains cautiously optimistic, with an emphasis on adaptable strategies to capitalize on global market shifts while mitigating potential challenges.
