Alison Shimada: 2026 Q1 Recap and Q2 Outlook

What stood out to you during the first quarter in equities?
Alison Shimada: What stood out to us as a team was the fact that emerging markets started off the year quite strongly in January and February, before the start of the Iran war. And we expect that throughout the year, should there be a return to some more stability or better direction in the markets, that we would see interest strongly return to the asset class. The reason for that is simply because people are looking for a diversification away from the U.S., and I think that is a very intelligent idea. So, I think that interest should continue. During the first quarter, we also had the chance to see the resilience of the strategy that we manage and witness the fact that it has the potential to do relatively better than the MSCI EM (Emerging Markets) Index, I think, which is important given the fact that, in the long term, you do have two different kinds of markets: strong markets as well as weak markets. So, it was a test of the resilience of the strategy.

What are you most focused on as we move into the next quarter?
Since we are actually still in the war, we are looking for the secondary and tertiary impacts on the asset class. From the lack of oil, the lack of natural gas, and how governments really respond to this—and they have stepped up to help consumers, to help businesses so far. So, I think that one of the important points as well is the timeline and how long it's going to take to get to a better place in terms of resolution or compromise, and this will impact the severity on the economies. However, we really feel strongly that this is a new era for emerging markets. It's emerging markets 2.0. So, the economies have developed nicely over the last 20 years. It's not the same set of countries that we've had in the beginning or 20 years ago. So, we feel that they can sustain some level of damages and there haven't been no systemic risks or other types of issues at a national level so far. So, we're watching that very carefully, but we're also looking for opportunities to buy more of the stocks that we like and have high conviction on. And those would be characterized by strong operational models, good cash flow, good balance sheets, strong management, decision-making—and we do see that a lot, even now. So, I think that emerging markets really have come center stage. It is not a call option on growth anymore. It is really very central to the world economy. And, so, we are looking for these opportunities to buy.

What’s your playbook for managing geopolitical shocks like the Iran conflict?
We talk and discuss and debate all of the factors on a regular basis, on a daily basis, because things are changing very rapidly and in conflict. So, we have to make sure that we consider all of the things that are important in terms of the portfolio. And we have to be able to make decisions with regard to positioning with less-than-perfect information, because otherwise one would be potentially late in making those decisions. So, we really want to use all of our background and experience in these types of situations to replicate and enhance our decision-making.

I believe the team is well positioned to navigate through this type of crisis because quant strategies can miss the turn. Yet, we can anticipate, because of our background, our experience, or expertise, we can navigate well through this type of crisis. And we have been through this before many times. I believe also that this team is very well positioned, given its 24 years of experience and the people's backgrounds with language capability in the region, to really understand what is going on on the ground, and that will serve us very well in the years to come.