1Q2025 - Emerging Markets Growth Commentary

• Emerging market equity returns, as measured by the MSCI Emerging Markets Index, were positive in the quarter, mainly driven by stronger performance in China, Brazil, and South Korea. Taiwan, India, and Southeast Asian markets, most notably Thailand and Indonesia, were the top detractors from the Index return.
• The Polen Capital Emerging Markets Growth Composite Portfolio returned 1.90% gross of fees and 1.67% net of fees, underperforming the Index return of 2.93% for 1Q 2025.
• Relative underperformance was primarily driven by security selection, although currency was also negative. Country and sector allocation were both favorable tailwinds.
• Security selection was strongest in Communication Services and Consumer Staples, which were outweighed by weaker selection in Consumer Discretionary and Financials. Sector allocation, an output of our bottom-up process, positively contributed to relative returns.
• Security selection in countries was strongest in India and Brazil, but was outweighed by weaker selection in Poland and China. Country allocation contributed positively to relative returns, primarily due to the Poland overweight, which benefited as the quarter’s best-performing emerging market currency.
• The top individual contributors to relative returns were Tencent Music Entertainment, Totvs, and Dino Polska. The top relative detractors were Alibaba (zero weight), Las Vegas Sands, and dLocal.
• We added to our position in Polish logistics company InPost and trimmed positions in Indian IT services company Infosys, Chinese and Singaporean gaming company Las Vegas Sands, Chinese digital game developer NetEase, and Chinese restaurant operator Yum China.
   

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