Fund of the week: riding the emerging markets bull
May 29, 2009
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Emerging markets are in a bull market, says Mark Mobius. And the Templeton Emerging Markets Trust, which he has managed since 1989, is riding it all the way. It's up 72.8% over six months against a 32.4% rise for emerging markets, after taking large positions in the Brazilian and Chinese markets, where 43% of the fund is invested.
Since 1 January, Brazilian stocks have risen by 53%. In China, they are up 39%. Mobius, who has a Ph.D in economics from the Massachusetts Institute of Technology, has been investing in emerging markets since first travelling to Asia in the 1960s. The son of a German father and a Puerto Rican mother, he looks for companies that are "selling at a great discount to future intrinsic value".
Evaluating individual firms is key to his style: he visits firms to "kick the tyres", talk to management and see products and facilities firsthand. Although Mobius takes sector trends into account when researching stocks, it is always "seen through the prism of how these factors will affect the specific firm's situation".
At the moment, he believes shares in Latin American commodity producers are "attractive" and that the region's banks are in "good shape". Commodity stocks look good because some of them have declined significantly below their intrinsic worth, he reckons. "We expect the global demand for commodities to continue its long-term growth." Consumer stocks are also a favourite, as with "rising per capita income and strong demand for consumer and other goods," in emerging markets, "the earnings growth outlook for these stocks is positive."
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Templeton Emerging Markets Trust top ten holdings
| Name of holding | % of assets |
|---|
| ITAU Unibanco Banco Multiplo SA |
6.0 |
| Companhia Vale Do Rio Doce |
5.7 |
| Petroleo Brasileiro SA Petrobras |
5.1 |
| Banco Bradesco SA |
5.0 |
| Akbank Turk Anonim Sirketi TRY1 |
4.9 |
| Hyundai Development Co |
4.6 |
| Denway Motors |
3.9 |
| Dairy Farm International Holdings |
3.8 |
| Petrochina Co |
3.8 |
| SK Energy Co Ltd |
3.6 |
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