Top Equity Funds [3Q26]: Amidst Semiconductor sell-off, Gold takes the crown

Market Recap 3Q26: A quarter of sharp reversal

Global financial markets endured a volatile third quarter as several trends that had powered markets in the first half of 2026 began to reverse. The relentless AI-driven rally of 2Q26 lost momentum from July, as stretched positioning, regulatory uncertainty and growing scrutiny over the returns on heavy AI investment triggered profit-taking across semiconductor stocks. Re-escalation of the Middle East tension added another layer of uncertainty, pushing Brent crude back above USD100 per barrel in September and reviving inflation concerns. The combination of higher energy prices and persistent inflation ultimately kept monetary policy tighter than markets had expected, with central banks in the US, Europe, Australia and Japan raising rates and driving global bond yields higher.

Yet despite these headwinds, resilient economic activity and continued corporate earnings growth helped global equities remain broadly stable. Global equities returned 0.3% during 3Q26 (Figure 1) (All returns are in SGD terms, unless otherwise stated).

But the relatively flat headline number hides a much more interesting story: market leadership changed significantly during the quarter.

The sharpest reversal occurred in South Korea. After being the strongest-performing markets earlier in the year, Korea fell 9.0% during 3Q26, making it the weakest major market in our research universe. Samsung Electronics and SK Hynix came under heavy selling pressure as investors cut exposure to semiconductor names following their earlier rally. we do not think the correction represents a breakdown in the underlying semiconductor earnings cycle, but the pullback was amplified by crowded positioning and leveraged investment products.

India also turned negative, falling 7.6% during the quarter, but for a different set of reasons. Higher oil prices were particularly challenging given the country’s heavy reliance on energy imports, raising concerns over a wider trade deficit, stronger inflationary pressures and margin compression for corporates. Additionally, rupee weakness further dragged on foreign-currency returns. Valuations also remained relatively demanding versus other high-growth Asian markets, contributing to continued capital outflows.

In contrast, Singapore benefited from precisely the characteristics investors were seeking in this environment: more defensive earnings, stronger income support and lower exposure to the most crowded areas of the AI trade. With banks forming a large share of the Straits Times Index, Singapore was also better placed to weather the shift towards higher interest rates. As a result, Singapore emerged as the strongest-performing market during the quarter, gaining 11.2%.

Elsewhere in Asia, previously unloved markets also began to recover. Hong Kong gained 7.1%, while China returned 2.4% during the quarter. Their relative resilience partly reflected lower direct exposure to the semiconductor hardware names that came under pressure, while investors also rotated back into large internet and platform companies where valuations remained comparatively attractive. Alibaba, for example, rebounded 13.2% during 3Q2026, while Xiaomi gained 15.1%, helping support the broader recovery in Chinese and Hong Kong equities.

The rotation from AI hardware towards internet and platform companies was also evident globally. The Digital Economy sector gained 9.9% during the quarter, supported by strong earnings from the Magnificent Seven, which helped ease some concerns over whether heavy AI capital expenditure could translate into meaningful revenue growth. Amazon, for instance, surged roughly 15% on 31 July post earnings, while Meta’s launch of its Muse AI agent and Meta Enterprise Platform reinforced confidence in the company’s ability to monetise AI across its ecosystem. This strength in large digital-platform companies helped keep the US market resilient, with equities gaining 1.0% despite the broader semiconductor sell-off.

Figure 1: Performances of major markets ranked for 3Q26

Top Performing Equity Funds of 3Q26

The quarter's top-performing fund list was dominated by one clear theme: gold and precious metals. The Ninety One Global Strategy Fund - Global Gold A Acc SGD topped the rankings with a return of 18.9%, followed closely by other gold-equity strategies from Schroders, BlackRock and UOB Asset Management. Gold traded above USD4,600 per ounce during late August and early September, supported by a combination of geopolitical uncertainty, central-bank demand and investor flows into gold-backed investment products. This helps explain why gold-equity funds recorded such strong gains during the quarter.

Commodity strategies were another major winner. The Neuberger Commodities A Acc SGD-H gained 15.5%, while the Schroder AS Commodity A Acc SGD-H rose 13.7%. These strategies benefited not only from gold but also from exposure to oil and energy-related commodities including Brent crude, WTI, natural gas and refined petroleum products. Oil prices climbed back above USD100 per barrel in September as renewed military tensions in the Middle East raised concerns over global supply. The good performance illustrates why real assets can play a useful diversification role when geopolitical risks increase.

Not every winner was tied to commodities. The Allianz Cyber Security AT Acc H2-SGD gained 13.7%, making it one of the quarter’s strongest-performing equity funds. Its performance was supported by the growing structural demand for cybersecurity as cloud adoption, AI deployment and digital infrastructure continue to expand. As companies generate and store more data across increasingly complex networks, cybersecurity is becoming less discretionary and more of a core component of corporate IT spending.

Table 1: Top Performing Equity Funds of 3Q26

Fund name	3Q26 (%)	Segment
Ninety One Global Strategy Fund - Global Gold A Acc SGD	18.9	Gold & Precious Metals Equity
Schroder ISF Global Gold A Acc SGD-H	18.6	Gold & Precious Metals Equity
Blackrock World Gold Fund A2 SGD-H	17.9	Gold & Precious Metals Equity
United Gold and General A Acc SGD	16.3	Gold & Precious Metals Equity
Neuberger Commodities A Acc SGD-H	15.5	Alternative Investments - Commodities
FTIF - Franklin Gold and Precious Metals A (acc) SGD	13.9	Gold & Precious Metals Equity
Schroder AS Commodity A Acc SGD-H	13.7	Alternative Investments - Commodities
Allianz Cyber Security AT Acc H2-SGD	13.7	Global Cybersecurity Equity
Blackrock World Energy Fund A2 SGD-H	13.6	Global Energy Equity
PIMCO Commodity Real Return Fund Cl E Acc SGD-H	12.5	Alternative Investments - Commodities
Total returns basis in SGD terms. Source: iFAST Compilations. Data as of 30 Sept 2026.

Bottom Performing Equity Funds of 3Q26

China strategies dominated the laggards. Several recorded double-digit losses, led by the United China A Shares Innovation A Acc USD, which fell 35.3%. At first glance, this may appear surprising given that the broader China market still posted a positive return during the quarter. The key difference was portfolio composition: many of these funds were heavily tilted towards domestic technology, semiconductor and innovation names, which sold off much more sharply than the broader market. For example, the United China A Shares Innovation Fund had around 46% in information technology, while Allianz China Future Technologies had 35.7% in IT and 16.2% in industrials. Major holdings such as Zhongji Innolight and NAURA Technology fell 36.4% and 30.4%, respectively, leaving these funds particularly exposed to the correction in high-growth A-share technology stocks.

The BNP Paribas Clean Energy Solutions Classic USD was another significant laggard, falling 24.3% during the quarter. Higher interest rates weighed on capital-intensive renewable-energy companies, while stronger oil prices improved the relative earnings outlook for conventional energy, further weighing on the clean-energy theme. The fund was also hurt by the broader semiconductor sell-off, with major holdings such as Samsung Electronics and SK Hynix, positioned as enablers of electrification, energy efficiency and digital infrastructure, coming under pressure. As a result, the fund faced headwinds across both its renewable-energy and technology-related exposures.

A similar interest-rate effect weighed on US small-cap growth strategies. The JPMorgan US Small Cap Growth A (dist) USD fell 13.3%, despite a 1.0% gain in the broader US market. Smaller growth companies are generally more sensitive to higher rates because they rely more on external financing and derive a larger share of their valuation from future earnings. As yields rose, they faced a double headwind from higher borrowing costs and lower valuation multiples.

Table 2: Bottom Performing Equity Funds of 3Q26

Fund name	3Q26 (%)	Segment
United China A Shares Innovation A Acc USD	-35.3	China (Onshore) Equity
BNP Paribas Clean Energy Solutions Classic USD	-24.3	Global Clean Energy Equity
Allianz China Future Technologies AT Acc HKD	-19.3	China Technology Equity
Allianz China A Shares AT Acc SGD	-17.2	China (Onshore) Equity
abrdn SICAV I - China A Share Sustainable Equity A Acc USD	-15.4	China (Onshore) Equity
T. Rowe Price Funds SICAV - China Evolution Equity A USD	-14.7	China Equity
FTIF - Franklin Sealand China A-Shares A Acc USD	-14.1	China (Onshore) Equity
Neuberger Next Generation Space Economy A Acc SGD-H	-14.0	Global Space & Defence Equity
JPMorgan Funds - US Small Cap Growth A (dist) USD	-13.3	US Small to Medium Companies Equity
Janus Henderson Horizon Pan European Absolute Return A2 EUR	-12.7	Europe including UK, Alternative Investments - Equity
Total returns basis in SGD terms. Source: iFAST Compilations. Data as of 30 Sept 2026.

Final thoughts: Why Asia looks even more attractive in 4Q26

The environment heading into 4Q2026 is clearly more challenging than it was at the beginning of the year. Bond yields have risen sharply; energy prices remain elevated and global central banks have become increasingly focused on inflation. The easy valuation tailwind from falling interest rates has therefore diminished.

However, this does not mean investors should step away from equities. Rather, we believe the next phase of the market will depend more heavily on earnings delivery and structural growth, rather than multiple expansion alone.

In this environment, our strongest structural conviction remains Asia’s semiconductor and AI supply chain. South Korean memory makers and Taiwanese foundries sit at the centre of the global AI infrastructure buildout, with sustained hyperscaler capex and expanding data-centre investment continuing to flow into the region. Multi-year demand commitments are also improving earnings visibility. At the same time, the opportunity set is broadening beyond chipmakers into power equipment, cooling, advanced materials, industrials, cybersecurity and digital infrastructure, allowing more sectors and economies to participate in the AI megatrend.

At the same time, 3Q26 showed why investors should not rely too heavily on a single theme. Singapore outperformed while South Korea corrected sharply; gold miners rallied while China innovation strategies struggled; and digital-platform companies remained resilient even as parts of the semiconductor complex sold off. While we remain constructive on semiconductors, diversification is increasingly important as market leadership becomes more fluid.

This is where Singapore can play a useful portfolio role. Its index mix of banks, telecommunications and industrials provides a more defensive earnings base than technology-heavy North Asia, while still offering selective exposure to semiconductor and structural growth themes. Capital-market reforms, including MAS’s Equity Market Development Programme, add a further medium-term catalyst by supporting broader institutional participation and liquidity. We therefore maintain our 4.0-star “Very Attractive” rating on Singapore equities and favour the iFAST-Amova Singapore Equity A SGD for broader market exposure.

More broadly, the 3Q26 correction has also improved the risk-reward profile of Asia ex-Japan and emerging-market equities. Earnings remain well supported by South Korea, Taiwan and Singapore, while China’s technology, material and manufacturing sectors continues to harness AI for growth despite broader economic softness. Valuations have also become more compelling: as of end-September 2026, the MSCI Asia ex Japan Index traded at 12.0x forward P/E and the MSCI Emerging Markets Index at 11.6x, well below the S&P 500 at 21.6x. This valuation gap offers greater upside potential if earnings continue to broaden, while also providing a larger margin of safety during periods of volatility.

We have therefore raised both markets from 3.0 stars, “Attractive”, to 4.0 stars, “Very Attractive”. For diversified regional exposure, we favour the M&G (Lux) Asian A Acc USD for Asia and the JPMorgan Funds - Emerging Markets Dividend A (mth) USD for emerging markets.

Related article:

iFAST Investment Outlook 4Q 2026: The AI supercycle meets a higher-for-longer world

Upgrading Asia and EM to 4.0 stars “Very Attractive”: The AI engine is broadening

Singapore Outlook 4Q26: Earnings and income carry the STI as reforms run further

US Outlook 4Q26: Growth remains strong but selectivity matters

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.