Navigating the Currents: Shelton Emerging Markets Fund's Q2 2025 Odyssey

As we reflect on the second quarter of 2025, the global financial landscape continued its dynamic dance, particularly within the vibrant yet often unpredictable realm of Emerging Markets (EM). The Shelton Emerging Markets Fund embarked on this journey with a steadfast commitment to identifying robust growth opportunities amidst shifting tides.

Q2 proved to be a period of nuanced performance, underscoring the importance of selective investment and agile strategy.

Economically, the quarter was marked by a mosaic of regional narratives. In Asia, China's recovery continued to be a focal point, albeit with lingering concerns over its property sector and the delicate balance between stimulus and structural reforms.

While certain sectors like advanced manufacturing and renewable energy displayed commendable resilience, broader consumer sentiment remained cautious. Conversely, India maintained its impressive growth trajectory, fueled by robust domestic demand, significant infrastructure investment, and ongoing government reforms aimed at boosting manufacturing and digital adoption.

This divergence highlighted the critical need for country-specific analysis within the EM universe.

Beyond Asia, Latin American markets experienced their own unique set of drivers. Commodity price fluctuations played a significant role, impacting economies heavily reliant on exports such as Brazil and Chile.

Political developments and monetary policy decisions in key economies also contributed to market volatility, creating both challenges and opportunities for our fund. Meanwhile, the EMEA region (Europe, Middle East, and Africa) presented a mixed bag, with some Gulf economies benefiting from stable oil prices and diversification efforts, while parts of Eastern Europe grappled with geopolitical uncertainties.

From a sector perspective, Q2 2025 reinforced our conviction in certain secular growth themes.

Technology and digitalization continued to be powerful engines, especially in areas like fintech, e-commerce, and cloud services, where EM companies are innovating rapidly and reaching vast, underserved populations. Healthcare also demonstrated its defensive qualities and long-term growth potential, driven by increasing affluence, aging populations, and rising demand for quality medical services.

We strategically navigated away from overly exposed and vulnerable sectors, prioritizing companies with strong balance sheets, sustainable competitive advantages, and proven management teams capable of executing through various economic cycles.

The Shelton Emerging Markets Fund's performance in Q2 reflected our disciplined approach.

We maintained a diversified portfolio, emphasizing companies that we believe are leaders in their respective markets, possess strong fundamentals, and are well-positioned to capitalize on structural growth trends regardless of short-term market noise. Our active management allowed us to adjust exposures, mitigate risks, and seize opportunities presented by market dislocations.

We continued to focus on companies with high-quality earnings, robust free cash flow generation, and transparent governance.

Looking ahead, the EM landscape is poised for continued evolution. While global macroeconomic uncertainties, including inflation trends, central bank policies, and geopolitical tensions, remain pertinent, we believe that emerging markets offer compelling long-term growth prospects.

The demographic dividends, burgeoning middle classes, and ongoing technological adoption in many of these economies provide a powerful structural tailwind. The Shelton Emerging Markets Fund remains committed to rigorous fundamental research, active risk management, and a patient, long-term investment horizon to uncover the most promising opportunities for our investors in this dynamic and exciting asset class.