Edison expert review

Templeton Emerging Markets Investment Trust — Managers keeping the faith with quality portfolio

Templeton Emerging Markets Investment Trust (TEMIT) benefits from the extensive experience of co-managers Chetan Sehgal (lead manager) and Andrew Ness. The trust’s performance has turned a corner as its results tend to be better during periods when share prices are driven by company fundamentals, which are the driver of long-term equity returns, rather than macroeconomic factors.

Emerging markets offer a broad range of investment opportunities and are home to a growing number of world-class, leading businesses. While all portfolio stocks are selected on a bottom-up basis, TEMIT’s high-conviction portfolio is widely diversified by geography, sector and market cap. Its balanced structure means the fund has potential to outperform in both up and down markets.

Why consider TEMIT?

Global investors, who are prepared to look through periods of above-average stock market volatility, may benefit from an exposure to emerging markets given their relatively higher growth prospects (c 65% of world growth) and attractive relative valuations compared with developed markets.

TEMIT is a well-established fund, and its managers can draw on the very wide resources of the Franklin Templeton Emerging Markets Equity (FTEME) team, who’s on-the-ground presence can identify interesting opportunities that may be overlooked by the trust’s peers. Sehgal and Ness invest in companies with sustainable earnings power that are trading at a discount to their estimated intrinsic values. Despite a difficult period of performance between mid-2021 and mid-2022, due to macroeconomic factors, the strategy has proved successful, as TEMIT’s NAV is ahead of its benchmark over the last one and five years and is also modestly ahead over the last decade.

The trust is the largest fund in the AIC Global Emerging Markets sector by a wide margin and its shares are liquid. TEMIT’s 12.8% discount is wider than its historical average of c 11.5% over the last decade*, providing scope for a higher valuation if investor risk aversion moderates or if the trust’s relative performance continues to improve versus its benchmark and its peers.

* Information correct as at the report's date of 4 July 2023. Please see Portfolio & Performance page for full current performance information.

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This research note has been commissioned by Templeton Emerging Markets Investment Trust from Edison. The research note does not constitute independent research for the purpose of legal and regulatory requirements and is therefore not subject to the regulatory protections afforded to independent research. In particular, the research note is not subject to any prohibition on dealing and both Edison and Franklin Templeton, and their respective staff, may have dealt in the securities discussed in the research note.

Meet the Team

Unparalleled Emerging Markets Experience

Chetan Sehgal is the lead portfolio manager of Templeton Emerging Markets Investment Trust (TEMIT). He has been a portfolio manager and senior research analyst for TEMIT since 2015. He is also a senior managing director and the director of portfolio management for Franklin Templeton’s Emerging Markets Equity Team.

Chetan was joined by portfolio manager Andrew Ness on 17 September 2018. Andrew is a seasoned investor with over two decades of experience as an emerging markets equity portfolio manager, and a strong alignment with the investment approach and philosophy utilised in the management of TEMIT’s portfolio.

The TEMIT portfolio management team are supported by an experienced team of over 80 dedicated emerging markets investment professionals located across 20 offices around the world.

How to Invest with Us

Shares in TEMIT qualify as an investment which can be held through an ISA. TEMIT is available through a stocks and shares ISA from a number of different companies. Your financial adviser will be able to give you full details of the options available to you.

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