Polen Fund Beats Index on AI Memory Bets, Returns 21.59% in Q2

Polen Capital's International Equity Strategy returned 21.59% gross in the second quarter, outpacing the MSCI ACWI ex-US Index by more than seven percentage points. The gain was powered by heavy exposure to memory-chip makers riding the AI infrastructure build-out, the firm said in its quarterly commentary.

Stock selection and sector allocation each added to relative performance. The fund's large overweight to Technology contributed 326 basis points. Underweights to Materials, Utilities, and Healthcare added a combined 121 basis points. Top contributors included SK hynix, Samsung Electronics, Kioxia Holdings, and Taiwan Semiconductor Manufacturing Co., which together added 1,156 basis points.

The managers said memory manufacturers have benefited from demand running materially ahead of supply. AI applications require substantially more memory than prior computing workloads, and capacity is being added only gradually. That allowed the group to raise prices aggressively and, in some cases, sell capacity multiple years forward. The fund held large positions in these names and took tactical gains during the quarter to manage risk.

TSMC, the leading foundry for advanced AI chips, continued to see demand outpace manufacturing capacity, supporting pricing power and margin expansion. The stock remains a top holding.

The largest detractors were energy companies Shell and Equinor, which fell as the US-Iran ceasefire normalized oil prices and reopened the Strait of Hormuz. The managers said the dislocation was transient and kept both holdings. Saab AB underperformed after a strong prior run left expectations elevated; the fund maintained that position as well. Toho, a Japanese movie producer, was sold because its next earnings inflection point fell outside the fund's time frame.

During the quarter, the fund initiated positions in nine new names, including Mitsubishi UFJ Financial Group, AstraZeneca, Nokia, and Rentokil. It exited Toho, Aviva, Celestica, LifeCo, and Rheinmetall.

Among the fund's holdings, TSM scores 69 on AlphaScala's proprietary metric, indicating moderate fundamental strength. MUFG scores 57 and AZN scores 35, reflecting the fund's tilt toward technology and financials over healthcare.

The managers noted that trade policy remains a source of uncertainty. Trump's 10% global tariff is set to expire in late July, and the administration has signaled additional tariffs may follow. That could affect the fund's holdings in Asian semiconductor and memory companies, they said.