Webinars and video updates

Market Environment

The first quarter of 2026 was defined by sharp rotations, elevated geopolitical tension, and meaningful quarter-end noise. The final trading day of the period had an outsized effect on reported relative returns, masking what we view as improving performance beneath the surface. More importantly, the quarter reinforced our conviction that artificial intelligence remains the dominant force shaping global equity markets, with investment broadening beyond semiconductors into power, optical components, data center infrastructure, construction, and industrial capacity.

That backdrop is expanding the opportunity set for active management. Benchmark concentration remains high, but the list of companies seeing improving economic returns is widening across sectors, geographies, and market-cap tiers. At the same time, rising capital intensity at some mega-cap platforms and faster AI-driven disruption in software and services are creating a more discriminating market environment. In our view, this is increasingly rewarding companies on the right side of structural change while placing pressure on businesses whose economics rely on aging barriers to entry.

Portfolio Positioning

The portfolio remains grounded in our Global Focused Growth Equity framework: quality businesses where research uncovers differentiated insight into improving economic returns. That framework continues to pull us toward a broader set of AI infrastructure beneficiaries, physical-world enablers, and selected cyclical and defensive holdings where the market may be underestimating the duration or breadth of improvement. We remain underweight much of the MAG7 outside of NVIDIA, while viewing Google as our preferred exposure among the largest hyperscaler platform companies.

During the quarter, we reallocated within major themes rather than stepping away from them. In AI infrastructure, we reduced concentrated DRAM exposure following strong gains and recycled capital into optical and other supply-chain beneficiaries to improve diversification and risk-adjusted return potential. We also increased and reshaped energy exposure as geopolitical risk rose, building a more balanced mix across upstream, refining, and natural gas. Regionally, we reduced India and some broader emerging market exposure, added to select Taiwan and China AI infrastructure beneficiaries, increased North America through U.S. energy and AI infrastructure, and continued to add selectively to defense and carefully contrarian opportunities in Europe.

Performance

Reported quarter-end performance understated the portfolio's path through the period, as the final trading day had an outsized impact on relative results. Even so, we were encouraged by the strategy's resilience in a market that sharply favored value over growth. We believe that outcome reflects the portfolio's focus on company-specific fundamentals and improving returns rather than simple factor exposure.

Stock selection in technology, industrials, and cyclicals was a source of strength. Contributors included Delta Electronics, Samsung, SK Hynix, TSMC, BE Semiconductor Industries, Teledyne, and Teradyne, highlighting the breadth of AI infrastructure beneficiaries across regions and end markets.Consumer discretionary and selected health care positions were weaker, while we also used the quarter to refine exposures in areas such as GLP-1, financials, and carefully contrarian holdings where recent valuation compression may be creating future opportunity.

Outlook

We continue to see AI infrastructure as one of the strongest sources of improving relative returns in global equities and expect a sustained capex cycle over the next several years to keep demand tight in power, optical, networking, PCB [printed circuit boards], memory, and semi-cap bottlenecks. The Iran-related oil shock has narrowed the path to rate cuts and raised inflation and recession risk, but if oil settles into a higher yet manageable range, we believe the portfolio can work through it, whereas a deeper shock would pressure even the best AI infrastructure names and require us to lean more heavily on our energy hedges. Against this backdrop, we are focusing on companies where incremental capital earns higher returns and where the market underestimates the durability of growth. In our view, the right response to a volatile environment is not to dilute our framework, but to tighten the portfolio around improving relative returns, strong earnings-revision potential, and real pricing power.

Hi, I’m Amanda Stitt, Portfolio Specialist for the Diversified Income Bond Fund. Thanks for joining me for our Q1 2026 update.

I’ll start with a quick look at markets, then move on to what we did in the portfolio and how the fund performed.

Coming into the year, we had a constructive view. Growth looked solid globally, particularly in the US, and we expected some divergence in central bank policy. Credit markets were well supported, with strong demand for income, so overall it felt like a good environment for carry strategies.

But Q1 turned out to be more volatile than expected.

Government bond markets were a big driver of that. We saw a rally mid quarter as inflation trends eased but that reversed quite sharply in March as the escalation of the Iran conflict pushed energy prices higher and reignited inflation concerns. Yields moved up across developed markets.The UK gilt market was a standout, with extreme volatility in March, reflecting both global pressures and domestic sensitivity to inflation and policy expectations.

Credit markets also had a tougher quarter. Spreads tightened early on, but then widened through February and more meaningfully in March. The move was more pronounced in high yield, while investment grade was more resilient. Importantly, cash bonds held up relatively well, with more of the volatility concentrated in synthetic markets as investors chose to hedge rather than sell.

In emerging markets, returns were positive through the first part of the quarter before reversing sharply in March.

But dispersion was again the name of the gameIn FX, the US dollar strengthened on safe-haven demand later in the quarter, although the move wasn’t fully sustained and was partly driven by positioning.Turning to the portfolio—We started with relatively low interest rate exposure, with duration below two years. That helped as yields rose. As we moved through March and yields became more attractive, we increased duration across the US, UK and Europe, ending the quarter just under three years.

In emerging markets, we rotated positions—taking profits in areas that held up well and reallocating into markets offering better entry points after the sell-off.We added to TIPS as higher inflation improved carry and provided a useful hedge. We reduced some cash investment grade credit and used synthetic markets more actively. Added to sovereigns and securitised assets where valuations looked more attractive.

In currencies, we reduced our short US dollar position and adjusted a number of emerging market exposures including TRY, INR and added NGN which proved robust as an oil exporter .Now turning to performance—The fund was down around 40 basis points over the quarter, compared to the Global Aggregate, which was down about 15.

The main driver of underperformance was credit exposure, particularly high yield and emerging markets, as spreads widened our longer risk position was penalised On the positive side, duration positioning helped, with our underweight to rates—especially in the US, eurozone, Japan and Poland—offsetting some of the losses as yields rose.

Currency was a modest detractor overall, with some EM FX positions under pressure as risk sentiment weakened.

So overall, it was really a quarter where our pro-risk positioning in credit weighed on returns, while our defensive stance on rates helped balance that out.

Importantly, we remain ahead of the benchmark over the full year.

Looking ahead—We’re not trying to take a directional view on how the conflict evolves. Instead, we’re focused on relative value opportunities.

The near-term outlook for inflation and growth is clearly more uncertain given the energy shock, but we still see longer-term support for global growth. The US in particular remains resilient, with a stable labour market and a healthy corporate backdrop, as reflected in the current earnings season.

From a policy perspective, central banks are likely to remain cautious in the near term, particularly given the uncertainty around inflation. But absent a re-acceleration in core inflation, there is still scope for easing later in the year.

In credit, while spreads have widened, fundamentals remain solid and demand for yield is still strong. So we remain broadly constructive, but increasingly selective as dispersion increases.

We also see inflation-linked bonds as a useful hedge in the current environment, particularly given the risk of further energy-driven inflation spikes.So to summarise: over the quarter we increased duration following the March sell-off, added selectively to credit, increased inflation hedges, and reduced our short dollar.

And more broadly, the key strength of this fund is its flexibility—we can adjust positioning as markets evolve and take advantage of dislocations like the ones we saw this quarter. We can avoid both credit and interest rate risk as well as take advantage of volatility. Our flexibility is the key to successfully navigating volatile markets Thanks for listening, and I look forward to speaking with you again next quarter.

Introduction:

Hello, I am Anton Dombrovskiy, welcome to our Q4 update of the TRP Funds SICAV - Euro Corporate Bond Fund where I will touch on the market overview, fund performance and positioning, and share our outlook from here.

2. Market Overview:

During the fourth quarter, euro investment-grade credit markets proved resilient, despite periods of interest-rate volatility and a heavy primary issuance calendar.

Credit spreads ended the quarter largely unchanged, finishing around 78 basis points above Bunds. After tightening earlier in the quarter, spreads widened briefly in November as markets reacted to shifting central-bank expectations and higher supply, but then recovered again into the ear-end as market conditions improved.

The yield on the fund’s benchmark – the Barclays Euro-Aggregate Corporate Bond Index – was driven predominantly by underlying government bond yield moves. It fell below 3% in October, before rising toward the end of the year alongside Bund yields, finishing the quarter around 3.2%.

Macro and policy developments remained in focus, with the European Central Bank on hold, while Fed cut twice last quarter. We saw France downgraded amid budget crisis by one notch to A+. UK saw gilt yields volatility ahead and after the budget release. While in the US the government shut-down - the longest in history - put the official data flow on hold.

An interesting development last quarter and earlier in 2025 was AI capital expenditure financing needs that led to some concerns about the ability of the markets to absorb increased supply. The theme will likely continue to generate headlines with large new issues going through the market. And while the impact is likely to be more pronounced in US equities and credit, it will also be relevant across markets for global risk assets.

Overall it was a good year for risk assets, where credit – HY and IG – has delivered healthy returns despite several seismic events. Strong demand and technicals, healthy fundamentals and still attractive all-in yields are the reasons for Euro IG resilience and the theme that is likely to continue playing out in 2026.

3. Positioning and performance:

Turning to performance and positioning, the strategy delivered a modestly positive return in the fourth quarter, broadly in line with the benchmark, while continuing to outperform over the full year. Long-term peer group ranks remain mostly in top quartile.

Security selection was the primary driver of relative performance. Key contributors included a high-conviction short position in a German chemicals issuer, where we expect a downgrade to high yield. Banks have performed well, especially our positions in select Central and Eastern European banks. Our overweight to SES, a European satellite operator, detracted from alpha in Q4 while still contributing positively to the 2025 full year alpha.

And looking at the full year 2025 , the fund delivered a healthy return of over 3 and a quarter % (3.29%), outperforming the index by 26 basis points. Security selection within Banks was particularly strong, with holdings in both select western european banks (like Banco Santander, UniCredit) and CEE banks (like eg Nova Ljubljanska) outperforming peers. Communications also contributed positively, supported by names such as TDC Net and mentioned before SES.

Offsetting part of this positive alpha for the year was our active credit beta management. Defensive index hedges were used to protect the portfolio during periods of heightened volatility. While these hedges worked as intended during risk-off episodes (like post Liberation Day volatility), they modestly detracted as spreads recovered later in the year. Importantly, this approach helps us manage downside risk while capturing idiosyncratic value from some of our higher-beta positions.

From a positioning standpoint, we maintained a modest overweight to credit risk throughout the quarter, with DTS ranging from around 1.1 to 1.15 times the index, toward the lower end of the strategy’s historical range. Sector positioning remained biased toward financials over industrials, and primary market activity was selective and valuation-driven.

4. Future Outlook:

Looking ahead, valuations are near multi-year tights, and as a result, we expect returns to be predominantly carry-driven, with spreads likely to remain range-bound in the absence of a significant macroeconomic, policy, or geopolitical shock.

Market technicals remain supportive, although supply dynamics may become somewhat more challenging as gross issuance increases, including funding related to AI investment and potential M&A activity. These pressures should be partially offset by elevated redemptions and coupon reinvestment flows.

Overall, we remain constructive on euro investment-grade credit, but disciplined and valuation-aware. We continue to prioritise higher-quality carry opportunities while maintaining flexibility to add risk opportunistically should volatility create more attractive entry points.

5. Conclusion:

To conclude, there are three key takeaways from the fourth quarter:

-          First, Euro Corporate Bond Fund remained resilient despite volatility and increased issuance delivering healthy return and outperforming its benchmark.

-          Second, while security selection was the main outperformance driver, downside risk management remains an important relative returns factor.

-          And third, positioning is balanced and flexible, focused on higher-quality carry today with the flexibility and enough dry powder to opportunistically add risk both in primary and secondary markets.

Review of 2025

2025 proved to be a “tale of two halves.” The first half performance struggled as theteam placed too much emphasis on balance amid macro risks and drifted away from itscore strength in stock selection. In the second half, a renewed focus on the GlobalFocused Growth framework investing in companies with improving relative returnsverses the MSCI All Country World Index (Net) and growth rates helped performance.
Key lessons from the year included the importance of adaptability, humility, andmaintaining a focus on relative rather than absolute improvement.

Market Environment
Three main forces shaped the year. First there was no systemic credit cycle, with littleevidence of broad-based credit stress, allowing for a constructive equity stance.Second, U.S. policy shifted in a more pro-growth direction through fiscal stimulus andderegulation. Third, the global surge in AI investment drove demand for technologyinfrastructure and created a new set of winners. Together, these forces required rapidlearning and continuous adaptation.

Portfolio Positioning

The portfolio remains focused on quality companies with improving returns trading atreasonable valuations. Changes to the investment framework in 2025 emphasizedidentifying businesses capable of improving their relative returns and outpacing thebenchmark.

• Technology: Remained an overweight, with a focus on AI infrastructure,including attractively valued international AI stocks, global semiconductors, andselect software, while remaining underweight the Magnificent 7.
• Financials: Developed market banks in the US and Europe such as Citigroupand Barclays performed well in Q4. Select growth-oriented financials includingAyden in payments lagged in same period but remain high conviction holdings.
• Healthcare: Exposure increased as US policy uncertainty eased and underlyingcompany fundamentals improved with positions such as Natera, ChugaiPharmaceutical, and Eli Lilly.
• Industrials: The portfolio emphasized aerospace and European defense andcompanies that support the AI infrastructure data center builds.
• From a regional perspective, the portfolio remained underweight the U.S, andoverweight international developed and emerging markets.

Portfolio Results & Change

Key contributors: AI supply chain through holdings such as SK Hynix, Advanced MicroDevices, US and European banks, and select healthcare positions.Key detractors included growth-oriented financials such as Adyen and CME Group,select consumer discretionary names, and aerospace original equipment manufacturer,Boeing which was exited during the period.Major portfolio changes included increasing healthcare exposure and expanding AIleverednames across sectors and geographies.

Market Outlook

The team expects market conditions to be supportive over the next six to twelvemonths, driven by fiscal expansion, supportive policy, and ongoing AI-driven capitalspending that continues to underpin economic activity. Key risks beyond that horizoninclude renewed inflation pressures and crowding positioning in U.S. equities. The teamremains committed to staying agile and applying its framework to adjust positioning asmarket conditions evolve.