It has been a tricky debut for Mobius Investment Trust since its launch on the London Stock Exchange two years ago.
The £100million fund, investing in under-researched and little known emerging market companies, has had to cope with a difficult stock market backdrop – with its share price falling back more than 20 per cent in March this year as the coronavirus pandemic panicked markets worldwide.
Although the shares have since bounced back strongly – 47 per cent over the past six months – they are trading at around their £1 launch price. Yet manager Carlos Hardenberg is convinced the trust, with its focus on small technology firms, healthcare stocks and companies specialising in online educational tools, offers an outstanding opportunity for investors to make long-term returns.
‘It’s been a challenging and exciting two years,’ says Hardenberg who is managing the trust from home in Munich, Germany. ‘We’ve had to deal with the trade dispute between China and the United States, and difficult issues in the stock markets of Turkey, South Africa and across the Middle East. It’s provided a good test and we’ve had to respond b y investing well and being both disciplined and patient. But it’s still early days.’
The trust is certainly no ‘me-too’ emerging markets trust. Unlike other funds that like to hold some of the ‘big’ established emerging market companies – such as Chinese technology giants Alibaba and Tencent – Hardenberg prefers companies that are much earlier in their corporate journey and backs them big. The result is a concentrated portfolio of 26 stocks that bears no resemblance to either emerging market indices or other funds.
‘We are looking for businesses that are often family controlled, understand their local market, and are disrupting the sectors they operate in – usually by applying new technology,’ says Hardenberg. One example is Turkish-based Logo that helps companies run more efficiently through a range of software packages. ‘Turkey is not the easiest neighbourhood,’ he says, ‘but Logo is a business that’s very much in growth mode.’
The same goes for IT specialist Sinbon Electronics, based in Taiwan. ‘Most investors think semiconductors when they look at Taiwan,’ says Hardenberg. ‘But dive down to the bottom of the ocean as a fund manager and you can find some pearls in this stock market.’ Sinbon produces a range of electrical components, including parts for popular e-bikes.
Hardenberg’s approach is very hands-on, often advising firms on how to improve their investor relations and corporate websites. ‘It’s an approach we adopted with eMemory Technology in Taiwan,’ he says. ‘It’s an excellent company and employs a raft of engineers who are passionate about their work. But it’s not always good at cultivating its share price. We have given them constructive advice which they have taken on board.’
Although the trust is relatively young, it has just made it on to Interactive Investor’s list of 60 ‘super’ investments (best buys). It is named after Mark Mobius, widely acknowledged as ‘Mr Emerging Markets’. Mobius and Hardenberg worked together at investment trust Templeton Emerging Markets and while the latter runs the two-year-old trust, the former oversees it ensuring the risk is acceptable.
The fund’s ongoing annual charge is on the high side at 1.7 per cent, but that will reduce as the trust’s assets increase.