MONTHLY COMMENT SUSTAINABLE FRONTIER - JULY 2026

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Heightened geopolitical tensions weighed on performance

In USD, the fund declined by 1.9% (EUR: -2.5%) in July, compared with a gain of 0.7% for the MSCI FMxGCC Net TR (USD) (EUR: +0.1%) and a decline of 3.1% for the MSCI EM Net TR (USD) (EUR: - 3.7%).

In terms of absolute performance (USD), the fund received the largest positive contributions from Nigeria (+0.2%) and the Philippines (+0.1%), while Pakistan (-0.7%), Vietnam (-0.5%), and Sri Lanka (- 0.4%) were the largest negtive contributors. Relative to the benchmark, the fund’s underweight position and stock selection in Vietnam (+1.4%), together with our overweight in Nigeria (+0.2%), contributed positively to relative performance. Conversely, our underweight positions in Romania (- 1.6%) and Slovenia (-0.6%), along with our overweight position and stock selection in Pakistan (- 0.5%), contributed the most to the fund’s negative relative performance.

At the individual stock level (USD), the fund received the largest positive contribution from Pakistani Meezan Bank (9% of the portfolio). The stock rose by 9% MoM after a local brokerage house revised its fair value upward and reiterated a Buy rating on the company. The second largest positive contribution came from the Egyptian private education company Cairo Investment and Real Estate Development (3% of the portfolio), whose share price increased by 19% MoM. During the month, the company reported its 9M FY26 results, with revenue and profit growing by 48% and 108%, respectively. Both the company’s operational and financial performance continue to track ahead of its medium-term guidance. Looking ahead, management plans to establish new universities over the next three years, which would increase higher education student capacity by at least 70%.

The largest negative contributions at the individual stock level came from Pakistani Systems Limited (7% of the portfolio) and Egyptian GB Corp (4% of the portfolio). Systems’ share price declined by 11% MoM despite the absence of any company-specific developments. Heightened US-Iran tensions weighed on investor sentiment during the month, leading to sector rotation towards banking stocks. GB Corp’s share price fell by 12% MoM, primarily due to profit taking following the significant price appreciation recorded in the preceding month.

Throughout July, the US-Iran conflict entered a more volatile phase following the collapse of the temporary ceasefire in the early part of the month. Both sides resumed military operations, targeting each other's military infrastructure, while Iran resumed disrupting maritime traffic through the Strait of Hormuz. Coincidentally, the conflict widened after Yemen's Houthi rebels announced a maritime blockade against Saudi Arabia and began attacking Saudi-linked oil tankers transiting the Bab-al-Mandab Strait, threatening another critical global energy shipping route. The resurgence in hostilities had an immediate impact on global energy markets. Brent crude, which had retreated towards pre-conflict levels in June, rallied sharply during July as concerns over supply disruptions through both the Strait of Hormuz and the Bab-al-Mandab intensified. Brent briefly crossed the USD 90 per bbl mark, reaching its highest level in more than a month.

At the time of writing, renewed hopes for diplomatic engagement between the two sides have eased Brent prices to below USD 80 per bbl. Markets increasingly recognise that any durable resolution is likely to require a negotiated settlement rather than a military outcome, leaving geopolitical developments as the dominant driver of oil prices and risk appetite heading into August.