Top Emerging Market Fund: Asian Chip Stocks are the Best Hedge Against the Iran Conflict

Amidst ongoing global market disruptions due to the Iran conflict, an emerging market equity fund that has outperformed 96% of its peers over the past year has made a clear judgment: high-end Asian technology stocks, particularly AI-related chip manufacturers, are the most defensively valuable asset class in the current geopolitical risk environment.

Robeco Emerging Stars Equities has allocated over 40% of its assets to Asian chip stocks, including those in South Korea. Jan de Bruijn, a client portfolio manager at the fund, stated that even if the global economy enters a recession, these chip companies, due to their high market share in critical product categories, will retain strong cost-pass-through capabilities and a formidable pricing power.

According to data compiled by Bloomberg, the fund had $4.6 billion in assets under management as of the end of February, with a 45% return over the past year and a 6.8% year-to-date return in 2026. Against the backdrop of Asian chip stocks outperforming the regional market this year, the fund's concentrated holdings have preemptively secured this source of excess returns.

Monopoly Structures Grant Chip Stocks a Pricing Moat

In de Bruijn's view, the core investment logic for Asian chip companies is rooted in the pricing power derived from market structural monopolies. "AI won't disappear because the global economy goes into recession," he said in an interview.

South Korean companies hold approximately 80% to 90% of the market share in High Bandwidth Memory (HBM) chips. De Bruijn pointed out that such a highly concentrated market structure means these companies can pass on a significant portion of their costs to downstream customers.

Against the backdrop of risk aversion triggered by the Iran conflict and an uncertain global economic outlook, the demand for high-end chips for AI infrastructure development is considered highly inelastic, forming a crucial support for the aforementioned judgment.

Discounted Holding Company Strategy Enhances Valuation Attractiveness

The fund also employs a "proxy trading" strategy, indirectly gaining exposure to target assets by acquiring shares in holding companies whose market prices often trade at a discount of up to 60% relative to their net asset value.

Accordingly, the fund chooses to hold SK Square rather than directly holding SK Hynix, and Naspers instead of directly holding TENCENT. De Bruijn stated, "Sometimes you find a holding company that owns shares in a target company, and when you sum up the valuations, you realize you are buying into that investment story at a significant discount. We believe this discount will narrow over time."

This strategy allows the fund to gain exposure to quality technology assets while entering at relatively low valuations, thereby enhancing the overall portfolio's margin of safety.