Financial Recap

H1 2026 has been defined by a collision of forces: the AI-driven growth supercycle and an energy supply shock from the Middle East conflict. Together, these created a strongly positive but selective environment — funds with exposure to emerging market equities, Asian equities, and technology delivered exceptional returns, while fixed income and macro strategies lagged.

The broad PRULink fund universe performed well in this period. Even the "bottom 5" by 1-year return are largely modest negatives or near-flat — a reflection of how constructive the overall market backdrop has been. Investors in equity-oriented PRULink funds will have seen meaningful appreciation. Those in fixed income should be aware that the rate environment remains challenging until central banks resume cutting cycles in earnest.

The second half of 2026 is unlikely to be as straightforward as the first. The conditions that drove exceptional returns in the top-performing PRULink funds — a broad EM rally, AI exuberance, and a surprise clean energy re-rating — are not guaranteed to repeat at the same intensity. That does not mean markets will fall, but it does mean investors should calibrate expectations more carefully.

The single biggest variable is the interest rate outlook. Central banks have largely paused their rate-cutting cycles in response to renewed inflation from the Middle East energy shock. If inflation begins to ease in H2 2026, the door opens for rate cuts to resume — which would be a significant tailwind for bond funds, REITs, and broadly for equity valuations. If inflation remains sticky, the higher-for-longer rate environment continues, which keeps pressure on fixed income while selectively supporting equities (particularly those with strong earnings, not just growth hopes).

Geopolitical risk has not gone away. The Middle East situation remains fluid, and US–China trade dynamics — while diplomatically managed — can shift quickly. These are not reasons to exit markets, but they are reasons to ensure portfolios are not overly concentrated in a single region or theme.

AI remains a structural story, but the easy gains may be behind us. The PRULink Global Technology Fund's ~+45% 1-year return reflects genuine earnings growth, not just speculation. However, at current valuations, the AI trade requires continued execution from the underlying companies. I think AI infrastructure spending will remain elevated through 2026 and into 2027 — but stock-level volatility within this theme will increase as the market separates genuine winners from laggards. Investors already holding this fund have done well; new investors should understand they are entering at a higher base.

Emerging markets and Asia look attractive on a medium-term view. The PRULink Emerging Markets and Asian Equity Funds posted exceptional 1-year numbers, but more importantly, the structural drivers — supply chain diversification, demographics, AI hardware demand, and relatively cheap valuations versus developed markets — remain intact. I believe Asia continues to be one of the more compelling multi-year stories in the PRULink fund universe. The near-term risk is a stronger USD or a global risk-off episode, which tends to hit EM hardest and fastest.

Fixed income deserves a second look — but not yet a full embrace. The two Asian Fixed-Income funds are the weakest performers in this period, and the global bond environment remains challenging. That said, bonds are now offering yields not seen in over a decade. When rate cuts do eventually resume, bond prices will reprice upward and investors who have been building positions will benefit. I think a patient, gradual approach to fixed income — rather than waiting for the "perfect moment" — makes sense, particularly for investors with a 3–5 year horizon and a need for income stability.

The China India Fund is a cautionary tale about blended mandates. Despite both markets having their own merits, the fund's blended structure dragged returns when India corrected and China recovered unevenly. Investors seeking targeted exposure are better served by dedicated funds — the PRULink Greater China Fund for China-specific conviction, and the newer PRULink India Opp Equity Fund as India exposure builds its track record.

For income-seeking investors: My preferred vehicle here is the PRULink StrategicInvest Income Fund. Rather than chasing yield through a pure bond fund — which has faced significant headwinds in this rate environment — the StrategicInvest Income Fund offers diversified income exposure across underlying funds, with a monthly distribution of 0.51 cents per unit. It is designed to provide steady, predictable cashflow without the concentrated credit or duration risk that has hurt more traditional fixed income funds. For investors who want their money working without overexposure to market swings, this is where I would anchor the income sleeve of a portfolio.

For growth-oriented investors — the core: Despite not appearing in this year's top 5, my consistent core recommendation for growth portfolios remains the PRULink Global Equity Growth Fund. The reason is simple: it offers broad global equity exposure with a meaningfully lower risk profile compared to thematic or single-region funds. In a year where the top performers were driven by narrow themes — AI, EM recovery, climate re-rating — the Global Equity Growth Fund may look unexciting. But a core holding is not meant to be exciting. It is meant to be reliable, diversified, and compounding steadily over time. Chasing last year's top performer as your core is one of the most common and costly mistakes investors make.

For growth-oriented investors — the tilts: Around that core, I believe selective satellite allocations can meaningfully enhance returns for investors with higher risk tolerance and a longer horizon. Three tilts I find compelling at this point in the cycle:

— PRULink Singapore Growth Fund: Singapore equities remain attractively valued relative to global peers, with strong banking sector earnings, a stable currency, and a structural role as Asia's premier wealth and business hub. A Singapore tilt adds both regional diversity and a degree of defensiveness given the STI's dividend-paying composition.

— PRULink Global Technology Fund: For investors who can stomach concentration risk, the AI infrastructure supercycle is not over. I view this as a high-conviction satellite position — sized appropriately, not as a core holding — for those with a 5-year-plus horizon and comfort with volatility.

— PRULink Emerging Markets Fund: EM is worth considering as a tilt for investors who want exposure to the broader Asia and developing world recovery story beyond just Singapore. The 1-year return of ~+60% has been exceptional, but the medium-term structural drivers — demographics, supply chain reshoring, AI hardware demand — remain intact. Position sizing matters here given EM's inherent volatility.

In all cases: this recap is a starting point for thinking, not a substitute for a proper financial review. The right fund mix depends entirely on your personal goals, time horizon, and risk tolerance — not on what performed best in the last 12 months.