“Storm clouds are gathering” over Mark Mobius’ Templeton Emerging Markets investment trust (Temit), according to investment trust analyst Alan Brierley.
Canaccord Genuity’s Mr Brierley suggested he was reconsidering his long-standing ‘buy’ rating on the trust following its poor performance and after a “tired” presentation with the trust’s management left him “underwhelmed”.
Mr Brierley warned his “inability to construct a solid fundamentals-based and high conviction argument is a concern” and said his buy recommendation was “approaching ‘rabbit in the headlight’ status”.
The £2bn trust has had lacklustre performance recently, as its value approach has suffered in a generally bearish environment for emerging markets.
In the past three years it has returned just 3.3 per cent, while the IT Global Emerging Markets sector has returned 16.1 per cent and the MSCI Emerging Markets index has returned 14.9 per cent, according to data from FE Analytics.
Mr Brierley said: “Storm clouds are gathering although we do not appear to have yet reached the point where investors begin ‘despondently selling’, a classic buy signal highlighted by Sir John Templeton. That said we are probably not too far away.”
Investment company analysts at Numis Securities offered a similar review, noting the trust’s “period of sustained improved performance will be needed for the discount to narrow significantly from the current 12.4 per cent”.
A spokesperson for Franklin Templeton said: “Our long-term contrarian approach means that we can perform quite differently versus the market in highly sentiment-driven market environments.
“Temit has outperformed the MSCI EM Value index over both 3 and 5 years respectively. As value investors we have to have the patience and conviction to weather sometimes long periods of volatility.”
