CONTRIBUTORS
Mel Jenner
Director, Investment Trusts (Edison)
Extract from the Edison Report: Written by Mel Jenner, Director, Investment Trusts. Edison, a leading investment intelligence and advisory firm, provides comprehensive research and analysis to empower investors and businesses around the world.
Proactive board seeking to lower the discount
Templeton Emerging Markets Investment Trust’s (TEMIT’s) board is frustrated by the company’s persistently wide discount so it has announced a series of measures aimed at increasing demand for the trust’s shares. These are an acceleration in share repurchases, a commitment to at least maintaining the current annual dividend, a conditional 25% performance-related tender offer and a phased reduction in management fees.
TEMIT’s two managers, Chetan Sehgal (lead manager) and Andrew Ness, remain positive on the outlook for emerging markets and consider that the general lack of appreciation of their prospects is providing a good opportunity. Emerging markets can offer the potential for above-average growth with attractive absolute and relative valuations.
Why consider TEMIT?
TEMIT’s board does not believe that the trust’s valuation reflects its strong performance* and has therefore increased the scale of returns to investors via a combination of share repurchases, dividends and a conditional tender offer, along with a reduction in management fees.
The trust’s managers seek to capitalise on long-term structural opportunities by identifying companies with sustainable earnings power that are trading at a discount to their intrinsic worth; hence, TEMIT could be considered as a ‘quality value’ fund. Sehgal and Ness believe that emerging markets can offer an attractive opportunity as they consider they are under-owned, underestimated and undervalued.
The managers are not constrained by benchmark allocations, evidenced by an overweight exposure to South Korea and underweight positions in India and China*, while the sector variances versus the index imply that the fund is positioned for an economic recovery.
Investment company discounts are generally wider than average during a period of economic uncertainty. TEMIT is not immune from this trend as its current 13.7% discount is towards the high end of the 5.8% to 16.5% three-year range and wider than the company’s average discounts over the last three, five and 10 years.*
* Information correct as at the report's date of 2 July 2024. Please see Portfolio & Performance page for full current performance information.
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.
Chetan Sehgal, CFA
Lead Portfolio Manager,
Templeton Emerging Markets Investment Trust (TEMIT)
Andrew Ness
Edinburgh (Portfolio Manager)
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.
Important information
Past performance is not a guide to future performance.
The value of shares in the Templeton Emerging Markets Investment Trust, and any income from them can go down as well as up and you may not get back the amount you invested.
In emerging markets, the risks can be greater than in developed markets. Emerging Markets can sometimes experience periods of political, economic and currency instability, as well as changing investor sentiment that cause investments to fall in value, sometimes sharply. For full details of all of the risks involved in investing in the Templeton Emerging Markets Investment Trust please read the Annual Report.
Issued by Franklin Templeton Investment Management Limited (FTIML), Cannon Place, 78 Cannon Street, London EC4N 6HL. Telephone: 0800 313 4049, Email: [email protected]. FTIML is authorised and regulated by the Financial Conduct Authority.
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