Here's where the veteran emerging-markets guru is placing his investors' money.
Dr Mark Mobius is undoubtedly one of the world's greatest investment gurus.
Thanks to his in-depth knowledge of international equities, the 75-year-old veteran has been running emerging-markets funds since the Sixties. Indeed, since joining fund manager Templeton in 1987, Mobius has acquired the nickname of "The father of emerging-markets funds."
The emerging-markets expert
However, you don't need to be a billionaire or a professional investor to access Dr Mobius's expertise. Indeed, all you need is a share-dealing account and a few pounds to spare.
That's because Dr Mobius manages the Templeton Emerging Markets Investment Trust (LSE: TEM), a UK-listed investment trust also known as TEMIT. This trust aims to provide "long-term capital appreciation for its investors through investment in companies operating in emerging markets."
As it happens, TEMIT has just released its results for the final quarter of 2011. At the end of last year, the trust's total assets were £1.9 billion and its net asset value (NAV) per share was 584p. At this time, TEMIT's share price was just short of 550p, so its shares traded at a near-6% discount to their NAV.
As I write, TEMIT shares trade at 621p, valuing it at just over £2 billion and making it one of the UK's largest investment trusts.
TEMIT's performance
During the global financial crash of 2007/09, emerging-markets equities performed very poorly, with smaller stock markets crashing by 50% or more. As a result, funds in these sectors were hit hard by falling prices and customer withdrawals.
That said, here's TEMIT's performance in recent years (annualised rates of return to 31 December 2011):
| Performance (%) | One year | Three years | Five years | Ten years |
|---|
| Share price | -17.8 | 27.8 | 13.5 | 19.2 |
| NAV | -17.3 | 25.9 | 12.2 | 17.5 |
| MSCI Emerging Markets Index | -17.6 | 17.4 | 7.6 | 13.5 |
As you can see, 2011 wasn't a good year for TEMIT, as its share price declined by almost a fifth (18%). However, it has risen by an average of almost 28% a year over three years and 13.5% a year over five years. Over the past decade, TEMIT's share price has grown by more than 19% a year. This is an outstanding medium-term performance, and a credit to Dr Mobius's stock-picking skills.
What Dr Mobius is buying
In the final quarter of 2011, TEMIT sold none of its holdings. However, Dr Mobius spent £27 million increasing the trust's holdings in these four companies:
- Russian giant Gazprom, the largest producer of gas in the world;
- South African miner Impala Platinum, a low-cost producer responsible for almost a quarter of global platinum output;
- MCB Bank, Pakistan's fourth-largest bank; and
- Peninsula Land, an Indian real-estate developer based in Mumbai.
In a nutshell, Dr Mobius likes simple, easy-to-understand businesses operating efficiently in fast-growing regions. He believes the four companies listed above offer low valuations and attractive returns on equity for investors.
Where TEMIT is invested
Here's the latest geographical split of TEMIT's assets:
| Region | % of net assets |
|---|
| LATIN AMERICA |
| Brazil | 17.9 |
| Mexico | 2.3 |
| ASIA |
| Hong Kong/China | 26.6 |
| Thailand | 11.9 |
| Indonesia | 10.2 |
| India | 9.3 |
| South Korea | 3.8 |
| Pakistan | 1.5 |
| Taiwan | 0.3 |
| EUROPE |
| Turkey | 5.3 |
| Russia | 4.4 |
| Poland | 1.2 |
| Hungary | 0.9 |
| Austria | 0.8 |
| AFRICA |
| South Africa | 2.9 |
| Others | 0.7 |
| Total | 100.0 |
For the record, the trust has more than 10% of its net assets in four different countries: Hong Kong/China (nearly 27%), Brazil (18%), Thailand (12%) and Indonesia (over 10%).
TEMIT's top 10 holdings
Finally, here are the trust's 10 biggest shareholdings, which account for almost half (49%) of its net assets:
| Country | Company | Sector | % of net assets |
|---|
| HK/China | Brilliance China Automotive | Consumer Discretionary | 10.4 |
| Brazil | Itau Unibanco Holding | Financials | 5.3 |
| Indonesia | PT Astra International | Consumer Discretionary | 5.2 |
| Brazil | Vale | Materials | 5.1 |
| Brazil | Banco Bradesco | Financials | 4.9 |
| India | Tata Consultancy Services | Information Technology | 4.4 |
| HK/China | Dairy Farm International | Consumer Staples | 4.0 |
| HK/China | Petro China | Energy | 3.3 |
| Turkey | Akbank | Financials | 3.2 |
| Thailand | Siam Commercial Bank | Financials | 3.1 |
| Total | 48.9 |
As you can see, this list is dominated by big stakes in companies based in Hong Kong/China (three holdings) and Brazil (also three holdings), plus investments in Indonesia, India, Turkey and Thailand. Given Dr Mobius's uncanny ability to pick the best of the developing world, I suspect that any of these 10 companies offers value and the potential for capital gains for patient investors.
A two-speed world
Looking ahead, Dr Mobius "remains bullish on emerging-market equities" and believes that, over the longer term, "emerging markets should outperform developed countries" (as they have done in eight of the last 10 years).
Finally, he "continues to see emerging markets benefiting from relatively good growth prospects, attractive valuations and solid fundamentals and will continue to monitor the markets for favourable investment opportunities."
In summary, anyone looking to gain exposure to the world's fastest-growing economies could do a lot worse than buying shares in TEMIT!
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