Top Equity Funds [2Q26]: The energy trade fades, semiconductor takes the baton

Market Recap 2Q26: From geopolitical risk to AI optimism

The second quarter marked a sharp shift in market leadership. Following the US-Iran memorandum of understanding signed on 17 June, crude oil prices fell from above USD100 per barrel to around USD72 by quarter-end as geopolitical risk premiums faded. Simultaneously, investors rotated decisively back into artificial intelligence (AI), viewing it as a multi-year structural growth theme rather than a cyclical investment trend. Against this risk-on backdrop, global equities gained 15.7% in SGD terms during the quarter (Figure 1).

Asia emerged as the clear winner of the quarter, led by the semiconductor powerhouses of South Korea and Taiwan. South Korea extended its remarkable rally from the first quarter, surging 65.2%. As home to the world's two dominant memory manufacturers, Samsung Electronics and SK Hynix, the country sits at the centre of the AI infrastructure buildout. Explosive demand for HBM and DRAM pushed both prices and order books sharply higher, driving substantial earnings upgrades and lifting the broader KOSPI Index.

Taiwan was not far behind, advancing 47.7%. Its unrivalled semiconductor manufacturing ecosystem, anchored by leading foundries and packaging companies, continued to benefit from soaring demand for AI chips. Japan also posted an impressive 34.9% gain as its specialised semiconductor equipment manufacturers capitalised on rising investment in advanced chip production.

US equities rebounded 15.8% in 2Q26, reversing a 4.3% decline in the previous quarter, supported by resilient corporate earnings with around 84% of companies beating consensus forecasts. However, leadership within the technology sector shifted. Rather than the Magnificent Seven, semiconductor companies drove the rally as investors favoured businesses with more immediate earnings leverage to the AI infrastructure buildout. Meanwhile, concerns over hyperscalers' escalating capital expenditure and the uncertain pace of returns weighed on the mega-cap internet names, limiting the broader Digital Economy sector to a modest 2.6% gain.

Not every market shared in the optimism. China and Hong Kong were the weakest-performing major markets during the quarter. Investors remained concerned about China's uneven economic recovery, particularly after retail sales unexpectedly contracted in May. At the same time, confidence in Hong Kong-listed internet companies weakened as intense competition, price wars and rising AI investment weighed on earnings at major platforms such as Alibaba and Tencent. The limited exposure of the MSCI China and Hang Seng Index to semiconductor hardware companies also prompted investors to rotate into China A-shares and other AI-focused markets that offered more direct exposure to the infrastructure buildout.

Figure 1: Performances of major markets ranked for 2Q26

Top Performing Equity Funds of 2Q26

If the first quarter belonged to energy, the second quarter belonged unequivocally to semiconductors.

Topping the leaderboard by a wide margin was Manulife Global Fund - Global Semiconductor Opportunities AA Acc USD, which delivered an extraordinary 101.7% return in just three months. As the only pure-play semiconductor fund on our platform, it is well positioned to benefit from the AI infrastructure buildout through holdings such as Kokusai Electric, which supplies semiconductor manufacturing equipment for memory and logic chips, Intel, whose foundry turnaround continues to improve, and Marvell Technology, a leading provider of custom AI chips and optical networking solutions for data centres.

The broader technology sector enjoyed similar success. Funds with diversified exposure across both the US and Asia proved particularly well positioned, allowing investors to participate across the entire semiconductor value chain globally. Neuberger Berman Next Generation Connectivity A Acc AUD-H returned an impressive 70.7%, supported by sizeable positions in Samsung Electro-Mechanics, SK Hynix and Kioxia. Likewise, BlackRock Next Generation Technology A2 USD gained 60.8%. Its portfolio includes AI networking specialist Lumentum Holdings, memory manufacturers Micron Technology and SanDisk, while SK Hynix remains one of its largest holdings.

The AI-driven rally also lifted country funds with concentrated semiconductor exposure. LionGlobal Korea USD delivered a strong 85.7% return. While categorised as a Korea equity fund, more than half of its portfolio is invested in Samsung Electronics, Samsung Electro-Mechanics and SK Hynix, effectively making it a high-conviction play on South Korea's memory semiconductor industry.

China also participated in the AI rally, although through a different part of the value chain. United China A Shares Innovation A Acc USD rose 70.7%, with nearly three-quarters of its portfolio invested in information technology companies. Its holdings include Zhongji Innolight, a leading manufacturer of optical transceivers used in AI data centres, and Suzhou Dongshan Precision Manufacturing, which produces high-density interconnect printed circuit boards used in AI servers.

The common thread across nearly every top-performing fund was clear: exposure to the physical infrastructure powering AI. Whether through advanced memory chips, semiconductor manufacturing equipment, optical networking components or server hardware, investors rewarded companies supplying the indispensable building blocks of the AI revolution.

Table 1: Top Performing Equity Funds of 2Q26

Fund name	2Q26 (%)	Segment
Manulife Global Fund - Global Semiconductor Opportunities AA Acc USD	101.7	Global Semiconductor Equity
LionGlobal Korea USD	85.7	Korea Equity
Neuberger Berman Next Generation Connectivity A Acc AUD-H	70.7	Global Technology Equity
United China A Shares Innovation A Acc USD	70.7	China (Onshore) General Equity
Blackrock Next Generation Technology A2 USD	60.8	Global Technology Equity
FTSF - Franklin Shariah Technology A Acc USD	59.9	Global Islamic Theme Equity
Blackrock World Technology Fund A2 AUD-H	58.4	Global Technology Equity
FTSF - Franklin Shariah Technology A Acc SGD-H1	57.9	Global Technology Equity
AB SICAV I International Technology A USD	57.1	Global Technology Equity
T. Rowe Price Funds SICAV - Global Technology Equity A USD	55.6	Global Technology Equity
Total returns basis in SGD terms. Source: iFAST Compilations. Data as of 30 June 2026.

Bottom Performing Equity Funds of 2Q26

Just as the second quarter produced clear winners, it also marked a swift reversal for some of the best-performing themes from the previous quarter.

Indonesia equity funds dominated the bottom of the rankings, led by Eastspring Investments - Indonesia Equity A USD, which fell 21.1%, followed by abrdn Indonesia Equity SGD (-20.6%) and Fidelity Indonesia A-USD (-17.9%). Investor sentiment deteriorated after concerns emerged that Indonesia could lose its emerging market status due to issues surrounding market free float and ownership concentration. Although MSCI deferred its review until November, uncertainty over market accessibility continued to weigh on investor confidence. Fiscal concerns further compounded the sell-off, as President Prabowo Subianto's ambitious spending plans fuelled fears of widening budget deficits and higher inflation. The Indonesian rupiah subsequently weakened to record lows against the US dollar, intensifying foreign outflows and dragging domestic equities lower.

Gold funds were another casualty of the market rotation. Schroder ISF Global Gold A Acc EUR-H, BlackRock World Gold Fund A2 SGD-H and LionGlobal Singapore Physical Gold A Acc SGD-H all declined by more than 12% during the quarter. The pullback reflected a hawkish repricing of US interest rate expectations, which strengthened the US dollar and eroded bullion's appeal as a safe-haven asset.

Energy and natural resources funds followed a similar path. BlackRock World Energy Fund A2 SGD-H, Ninety One Global Strategy Fund – Global Natural Resources A Acc SGD-H, United Global Resources A Acc SGD and Schroder AS Commodity A Acc SGD-H all retreated as geopolitical risk premiums faded, oil prices normalised and commodity prices broadly softened.

Table 2: Bottom Performing Equity Funds of 2Q26

Fund name	2Q26 (%)	Segment
Eastspring Investments - Indonesia Equity A USD	-21.1	Indonesia Equity
abrdn Indonesia Equity SGD	-20.6	Indonesia Equity
Fidelity Indonesia A-USD	-17.9	Indonesia Equity
Schroder ISF Global Gold A Acc EUR-H	-15.9	Gold & Precious Metals Equity
Ninety One Global Strategy Fund - Global Natural Resources A Acc SGD-H	-13.1	Resources Equity
Schroder AS Commodity A Acc SGD-H	-12.9	Alternative Investments - Commodities
Blackrock World Energy Fund A2 SGD-H	-12.6	Energy Equity
United Global Resources A Acc SGD	-12.4	Resources Equity
Blackrock World Gold Fund A2 SGD-H	-12.4	Gold & Precious Metals Equity
LionGlobal Singapore Physical Gold A Acc SGD-H	-12.2	Alternative Investments - Gold & Precious Metals
Total returns basis in SGD terms. Source: iFAST Compilations. Data as of 30 June 2026.

Final thoughts: Asia and Digital Economy remain our highest conviction themes

The massive performance flip between 1Q26 and 2Q26 serves as a textbook reminder that geopolitical shocks cause temporary market dislocations, but structural fundamentals ultimately win over the medium to long term. Investors who panicked and dumped their high-growth technology positions during the March oil spike would have missed one of the most explosive three-month tech rallies in history.

Looking ahead to 2H2026, we remain constructive on Asian equities, particularly markets at the centre of the AI infrastructure buildout.

South Korea and Taiwan continue to enjoy strong structural tailwinds. Samsung Electronics and SK Hynix together control around 79% of the global HBM market, while TSMC remains the only foundry capable of producing leading-edge chips at scale. As AI models become increasingly compute-intensive, demand for advanced memory and chip manufacturing is likely to remain robust. Despite these advantages, Asia's semiconductor sector trades at a much more attractive valuation compared to US semiconductor names, leaving room for further upside if earnings continue to surprise. Investors seeking exposure may consider LionGlobal Korea Fund SGD and LionGlobal Taiwan SGD, both of which provide broad exposure to the region's semiconductor leaders.

Singapore is another market we favour, albeit for different reasons. While not a major chip producer, it is emerging as a key beneficiary of the AI investment cycle through its electronics manufacturing and precision engineering industries, with the impact already evident in export growth. Ongoing support from the Enhanced Equity Market Development Programme (EQDP) should also underpin valuations, particularly among small- and mid-cap stocks. We continue to favour Amova Singapore Dividend Equity SGD for dividend exposure and iFAST-Amova Singapore Equity A SGD for investors seeking participation in broader market including small-cap opportunities.

We also remain positive on China. While weak consumption and the property downturn continue to weigh on sentiment, the country's industrial economy remains resilient. GDP grew 5.0% in the first quarter, exports reached a record USD376.8 billion in May, and high-tech manufacturing output rose 15.1% year-on-year. Trading at just 11.5x forward earnings, below its 10-year average, Chinese equities appear attractively valued following the recent correction. We believe improving earnings momentum in 2H2026 makes Fidelity China Focus A-SGD an attractive way to gain exposure.

While we remain underweight US equities overall, we continue to favour the Digital Economy theme. Although the sector has lagged semiconductor stocks in 1H2026 amid concerns over AI capital expenditure and returns, we expect sustained investment in AI infrastructure to drive stronger earnings for software, cloud and digital platform companies as adoption broadens across industries. Investors may consider Eastspring Investments Unit Trusts – Global Technology SGD for concentrated exposure to US technology leaders, or Fidelity Global Technology A-ACC-USD for a more globally diversified approach.

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Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.