13th July 2015
Dr. Mark Mobius is stepping down as day-to-day manager of the Templeton Emerging Markets Investment Trust (TEMIT) after running the portfolio for more than a quarter of a century.
The veteran fund manager will hand over control of the £1.6bn vehicle to his colleague Carlos Hardenberg on 1 October 2015.
Mobius will continue to lead the group and remains fully engaged in the team’s research and investment activities, the business said in a statement.
Peter Smith, TEMIT’s chairman, said: “The appointment of Carlos Hardenberg as lead portfolio manager, supported by Mark Mobius and Chetan Sehgal, will provide renewed focus for the next stage in the Company’s development.”
Hardenberg is currently director of frontier markets strategy and is based in Istanbul, Turkey, although he will be relocating to London as part of the changes. He joined Franklin Templeton in 2002 and was previously an analyst in the corporate finance department of Bear Stearns in London.
Despite Mobius’s reputation, fund performance has been far from covered in glory in recent years. Over the past one, three and five years the trust has underperformed against its MSCI Emerging Markets benchmark according to FE Analytics. In the latter period the trust lost near 2% while its MSCI yardstick achieved a total return of 8%.
In a note, investment trust analyst group Numis Securities asserted that it has long regarded TEMIT as “an attractive vehicle to provide core exposure to Global Emerging Markets through a value approach”.
However, it added that recent performance has been poor, with the value style being out of favour and exposure to materials, energy and financials detracting.
It said: “Uncertainty over succession planning regarding the future after Mark Mobius has been hanging over the trust for many years.”
Numis added that at a recent analyst meeting with the group, they were unimpressed as there was “no convincing explanation for the degree of recent under-performance”.
“TEMIT’s discount has widened to double digits, and we believe that the change in management responsibilities has been made in order to reassure investors.
“In our view, the jury is still out in relation to TEMIT,” said Numis
Longer-term however the fund’s performance is more impressive, as Adrian Lowcock, head of investing at AXA Self Investor asserted: “Dr Mobius had established himself as one of a few of leading fund managers in the global emerging markets space over the past 26 years. Over the past 10 years he has returned 184% compared to the MSCI Emerging Markets index returning 135%.”
Lowcock highlighted to that emerging markets have been out of favour for the past few years as they have been reeling from a slowdown in growth due to an over-reliance on exports and excessive borrowing.
“Emerging markets have become more exposed to swings in developed market economies and the strong US dollar. Whilst valuations look attractive relative to developed markets investors need to be cautious as the strong dollar will impact on Emerging Markets companies profitability and return on equity which has been deteriorating,” he added.
Lowcock outlines three alternative fund tips for investors:
JP Morgan Emerging Markets Income
“Richard Titherington runs a flexible income fund and will invest in both defensive and cyclical stocks. This ability to tilt the portfolio helps the manager deliver strong performance whilst maintaining a high yield.”
Standard Life Global Emerging Markets Equity Unconstrained
“Manager, Matthew Williams adopts Standard Life’s ‘Focus on Change’ philosophy, looking for a winners list of 20 funds which establish a core portfolio.”
M&G Global Emerging Markets
“Matthew Vaight offers a value approach to investing in Emerging Markets with stock selection being purely the driver of returns. His contrarian style and value bias might lead to underperformance in a downturn but is an attractive diversifier for emerging markets exposure.”