Interactive Investor

Broker upgrades TEMIT after Mobius steps down

14th July 2015 10:24

Rebecca Jones from interactive investor

In an announcement to the London Stock Exchange on Monday the board of Money Observer Rated fund Templeton Emerging Markets Investment Trust said that Carlos Hardenberg will take over as lead portfolio manager on the trust from veteran investor Mark Mobius, who has run the portfolio since its inception in 1989.

Hardenberg is currently director of frontier markets strategy at Franklin Templeton and will be re-locating from Istanbul to London to take the new post from 1 October.

Mobius, who is executive chairman of Templeton Emerging Markets Group, will remain as a portfolio manager on the trust while Chetan Sehgal will continue to serve as senior research analyst on the investment team from his base in Mumbai.

Significant contributions

Commenting on the change, Mobius says: "The Templeton Emerging Markets Group routinely reviews portfolio management assignments and makes changes based on what we believe is in the best interests of our clients. The group and I also continuously evaluate how to bring out the best from our investment talent.

"The appointment of Mr. Hardenberg as lead portfolio manager with continued support by Mr. Sehgal as senior research analyst on TEMIT, is an acknowledgment of their significant contributions to the Templeton Emerging Markets team and TEMIT's desire to benefit from a more dedicated application of their considerable skills to the TEMIT portfolio," Mobius says.

The move comes during a sustained period of underperformance for TEMIT. Over one, three and five years it is one of the bottom performers in the Association of Investment Companies' global emerging markets equities sector, shedding 1.7% in share price terms in the five years to 13 July compared to a gain of 13.4% from the sector over the same period.

Jury still out

Over 10 years the trust remains a top performer, delivering 184% in share price gains while being one of the oldest, most established UK-listed emerging market vehicles.

Commenting on recent performance and the decision to appoint Hardenberg as lead manager, investment trust broker Numis Securities says: "Uncertainty over succession planning regarding the future after Mark Mobius has been hanging over the trust for many years.

"Allan Lam had taken on the key role for TEMIT's stock selection and he was unimpressive at a recent analyst meeting, in our view, with no convincing explanation for the degree of recent underperformance. 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," says Numis.

Numis says that it believes "the jury is still out" on TEMIT, adding that it "may be worth considering" Genesis Emerging Markets as an alternative.

In contrast, broker competitor Stifel has upgraded its rating on TEMIT from negative to neutral as a result of the manager change: "We always liked the fund's high conviction, value-oriented approach but were concerned about its reliance on its longstanding manager, Mark Mobius, with no obvious deputy.

"With Carlos Hardenberg now taking on the role of lead portfolio manager of TEMIT and Mobius staying on as a portfolio manager, this has been addressed. Furthermore, we believe that eventually the headwinds to TEMITs investment style will subside, helping future performance," says Stifel.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.