Touchstone Sands Capital Emerging Markets Growth Fund Outperforms in Q2 2026 Led by AI Infrastructure

The Quick Take

• Touchstone Sands Capital Emerging Markets Growth Fund outperformed its benchmark in Q2 2026
• AI infrastructure companies within the fund's emerging market portfolio drove outperformance during the quarter
• The Q2 commentary highlights AI-driven growth as the dominant theme shaping emerging market equity returns

The Touchstone Sands Capital Emerging Markets Growth Fund (TSMGX) outperformed its benchmark during the second quarter of 2026, according to the fund's Q2 commentary published on SeekingAlpha. AI infrastructure companies were the primary driver of relative outperformance, reflecting the theme that has increasingly dominated emerging market equity allocation decisions as artificial intelligence infrastructure spending accelerates across Asia and other developing regions. The fund's investment approach focuses on high-quality growth companies across emerging markets, with AI infrastructure exposure becoming a central component of that quality growth filter.

The fund's Q2 outperformance validates the thesis that AI infrastructure investment is not exclusively a developed-market phenomenon—emerging market technology companies supplying components, services, and data center infrastructure for the global AI buildout are generating earnings growth that supports equity outperformance. This is a meaningful signal for asset allocators reviewing their emerging market fund exposures, as traditional EM value plays in commodities and financials have underperformed AI-exposed technology names in recent quarters. The fund's benchmark outperformance may drive net inflows as investors seek emerging market equity exposure with a quality AI growth tilt.

Fund investors and prospective allocators should review the specific AI infrastructure holdings named in the TSMGX Q2 commentary for insight into which emerging market companies the Sands Capital team views as highest quality within this theme. Monitor the fund's Q3 inflow data, as a track record of benchmark outperformance in a prominent theme typically attracts additional retail and institutional capital. The macro variable is the durability of the AI infrastructure spending cycle—if hyperscaler capex continues to accelerate through 2026, emerging market AI suppliers maintain their earnings growth advantage over traditional EM sectors.

Synthesized from 1 source.