Harding Loevner’s Q3 Letter Blames AI-Driven Market Narrowness for Fund’s Lag

Overview

• The Global Equity Strategy returned 2.52% net in Q3 versus 7.74% for the MSCI ACWI and 7.36% for MSCI World, bringing year-to-date net gains to 10.61% versus 18.86% and 17.83%, with Netflix and Tradeweb detracting and TSMC and Alphabet contributing.
• The letter describes one of the strongest momentum stretches in over 70 years, with high‑momentum stocks outperforming low‑momentum by roughly 45 percentage points, largely tied to AI.
• TSMC raised full‑year revenue guidance to about 30% on robust demand for high‑performance computing used in AI, reinforcing its pricing power as rivals struggle.
• Alphabet reported rapid enterprise uptake of Gemini—its user base reportedly triple ChatGPT’s—and benefited from a favorable DOJ antitrust ruling that avoided forced divestitures.
• Portfolio activity included a new position in Elevance Health in Q3 as a lower‑legal‑risk health care exposure following the May exit from UnitedHealthcare during a criminal investigation.