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Slightly Bullish +25

Harding Loevner International Developed Markets Equity Q1 2026 Commentary

🏢 Shell led sector performance with a 29% quarterly gain, driven largely by March activity.

✂️ The firm reduced positions in ASML, Disco Corp, TSMC, and Samsung Electronics.

📈 Harding Loevner added Recruit shares to capitalize on AI-driven improvements in job matching.

📉 The International Developed Markets Equity composite gained 0.8% gross of fees versus a MSCI World ex US Index decline of the same magnitude.

🛡️ BAE Systems reported strong results and guidance, with global defense demand pushing its backlog to record highs.

📈 Oil prices spiked due to the Iran conflict and Strait of Hormuz disruptions, marking the Energy sector's best quarter in over 15 years.

💼 Harding Loevner manages over $52 billion across long-only equity strategies in developed, emerging, and frontier markets.

🏛️ The firm serves a diverse client base including sovereign wealth funds, foundations, pension plans, and family offices.

🔒 Harding Loevner maintains a culture of transparency, collaboration, accountability, and integrity among its staff.

Bullish Signals
  • Shell delivered strong performance in the quarter, rising 29% with 14% of that gain achieved in March alone.
  • The International Developed Markets Equity composite returned 0.8% gross of fees, outperforming the 0.8% decline seen in the MSCI World ex US Index.
  • BAE Systems posted solid results for 2025 and provided positive 2026 guidance while seeing global defense demand drive new orders to a record backlog.
  • The Energy sector experienced its best-performing quarter in over 15 years due to oil price spikes triggered by geopolitical tensions.
Risk Factors
  • Harding Loevner trimmed holdings in ASML, Disco Corp, TSMC, and Samsung Electronics, indicating a potential reduction in exposure to the semiconductor sector which has historically been a growth driver.
  • The International Developed Markets Equity composite returned only 0.8% gross of fees for the quarter, trailing significantly behind the broader performance implied by the headline positive moves elsewhere.
  • Despite Shell rising 29%, the fund's overall return was merely 0.8%, suggesting that gains in specific sectors like Energy (driven by geopolitical tensions in Iran and the Strait of Hormuz) were not enough to offset underperformance or flatness in other areas relative to fees.
  • The commentary notes a 0.8% decline in the MSCI World ex US Index during the quarter, highlighting regional weakness outside of the specific holdings that performed well.
Full Analysis
Harding Loevner released its Q1 2026 commentary on May 8, 2026, detailing significant shifts in its International Developed Markets Equity portfolio which outperformed the broader MSCI World ex US Index, returning a gross 0.8% versus the index's 0.8% decline for the period. The firm significantly increased exposure to Shell, the sector's sole holding, which rose 29% overall during the quarter with a substantial portion of that gain occurring in March alone. Conversely, Harding Loevner reduced positions in semiconductor and technology leaders including ASML, Disco Corp, TSMC, and Samsung Electronics. The portfolio manager also initiated a position in Recruit Holdings, citing the company's potential to leverage artificial intelligence on its proprietary data to enhance matching between blue-collar job seekers and prospective employers. Sector performance was heavily influenced by geopolitical events; heightened conflict in Iran and disruptions in the Strait of Hormuz drove oil prices higher, resulting in the Energy sector achieving its strongest quarter in over 15 years. Defense stocks also saw support as BAE Systems reported solid results for 2025 and provided 2026 guidance that included new orders pushing the company's backlog to a record level, aided by increased global demand for defense capabilities.