The Artisan Developing World Fund (Investor Class) posted a -17.34% return for the first quarter ended March 31, 2026, underperforming the MSCI Emerging Markets Index, which declined by just 0.17%. All figures are in USD. Over the long term, since June 30, 2015, the fund has delivered a cumulative return of 123.09%, surpassing the index’s 85.13%.
Quarterly Market Overview
Geopolitical tensions dominated the quarter, including U.S. military actions, renewed tariff risks, and doubts about Federal Reserve independence. Investors sought safe havens, driving silver up 63.1% and gold up 25.4% from year-end 2025 through late January. Confidence returned with Kevin Warsh’s nomination as Fed chair, marking a dollar low.
Advancements in artificial intelligence persisted, with Anthropic exceeding $30 billion in run-rate revenue, Claude tools disrupting industries, and OpenClaw enabling agentic AI, including in China. South Korea surged 59.6% year-to-date through February 26, Taiwan rose 25.3%, and the MSCI Emerging Markets Index gained 15.4%.
A downturn followed amid anticipated U.S. and Israeli actions against Iran. From February 26 to March 31, the index erased year-to-date gains, the dollar strengthened 3.0% versus emerging market currencies, 10-year U.S. Treasury yields climbed from 4.01% to 4.32%, high-yield spreads widened from 2.82% to 3.17%, and Brent crude jumped from $70.75 to $118.35. South Korea and Taiwan fell 27.0% and 13.0%, respectively, while silver and gold dropped 14.9% and 10.0%.
The fund’s net asset value declined 9.30% in this period but showed relative outperformance. South Korea and Taiwan boosted the index by 158 and 147 basis points, respectively; excluding them, the benchmark would have fallen 3.2%.
Latin America advanced 14.6% on commodities strength, with Brazil up 19.1% due to rare earths deals with Europe and the U.S. Saudi Arabia gained 9.3% on oil, while the UAE slipped 7.1%. India tumbled 18.1% amid oil price pressures on deficits and AI concerns, Indonesia dropped 20.7% over policy risks, the Czech Republic fell 10.1% on energy costs, and China declined 8.9% despite trade surpluses and AI growth.
Passport-listed holdings returned -12.16%, outperforming emerging market-domiciled stocks at -20.96%.
Key Contributors and Detractors
Top performers included ARM Holdings, which announced an AI-focused AGI CPU expected to boost revenues; Kingsoft Cloud, riding Chinese AI demand and pricing power; Coca-Cola, delivering steady volumes in volatility; Kweichow Moutai, after price hikes and direct-to-consumer shifts; and Netflix, following its Warner Bros. deal and price increases.
Major detractors were MakeMyTrip, hit by Middle East travel issues and AI disintermediation fears; Sea, amid investment uncertainties and AI concerns despite profit growth; Adyen, after tighter 2026 guidance despite growth; Snowflake, pressured by software AI fears despite strong results; and Tencent, as investors questioned AI strategy and margins.
Market Outlook
China maintains an export-driven model, achieving a record $213.6 billion trade surplus in the first two months of 2026, up 25.3% year-over-year. U.S. share of exports fell to 11.1% from 14.7%, with buyers worldwide aided by a weaker currency. The nation advances up the value chain, exporting high-tech goods like open-source AI models trained on domestic silicon.
Chinese AI proliferates due to lower token costs from energy efficiencies and innovations. Premier firms like Alibaba stand ready for AI, cloud, and semiconductor expansion. The monetary environment merits attention as global dynamics evolve.
