Portfolio And Performance

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Introduction

TEMIT has been helping investors access the dynamic growth potential of emerging markets companies since 1989. In this short video, manager Carlos Hardenberg, talks about some of the investment opportunities he is currently finding.

For more information about TEMIT please click here

Company objective

To provide long-term capital appreciation for its shareholders through investment in companies operating in emerging markets or whose stocks are listed on the stock markets of such countries. This includes companies, which have a significant amount of their revenues in emerging markets but are listed on stock exchanges in developed countries.

Quick factsAs of 31/10/2017

Total Net Assets [further-information] £2,431.22 million
Market Capitalisation [further-information] £2,133.21 million
No of shares in issue 276,680,732
Net Gearing [further-information] 0.2%
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Ticker {{overview.quickFacts.ticker}}
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ChargesAs of 31/10/2017

Ongoing Charge [further-information] 1.12%

Key dates

Launch Date {{overview.keyDates.launchDate}}
Financial Year End 31 March
Next AGM July 2018
Stock exchange announcements

Management

Carlos Hardenberg

Carlos Hardenberg
Lead Manager

Chetan Sehgal

Chetan Sehgal
Portfolio Manager

Mark Mobius

Mark Mobius
Portfolio Manager


Investment strategy

As pioneers in emerging market equity investing, the Templeton Emerging Markets Group use their expertise, experience and local country knowledge to help them uncover emerging market companies with the potential to grow in value over the long-term.

Find out more

Risks

Like all stock market investments, you take the risk that the companies, currencies and markets that TEMIT invests in do not perform as expected. Emerging markets can be subject to significant and rapid changes in value, particularly in the short-term, so the value of your investment can rise and fall accordingly. It could mean you may get back less than you invested. Although you are free to decide at any time when to sell shares in TEMIT, you should consider it a long-term investment.

Past performance is not a guarantee or an indicator of future performance.

The companies in which TEMIT invests are, by reason of the locations in which they operate, exposed to the risk of a lack of established legal, political, business and social frameworks to support a securities markets or the imposition of trade barriers and exchange controls. They may make it difficult to sell investments or result in price changes. It may not always be possible to sell shares in investment companies such as TEMIT.

There is no guarantee that TEMIT will achieve its objective.

TEMIT can borrow money to purchase additional investments (gearing). This can increase the risk to your investment if the cost of the gearing exceeds the investment return from it.

These and other risk considerations are covered in TEMIT’s annual report

We are unable to provide any advice about TEMIT’s suitability for your personal circumstances. If you are in any doubt you should speak to a professional financial adviser.

10 largest holdings As of {{portfolio.holdings.asOfDate}}

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Portfolio Details

Sector breakdown 31/10/2017

SectorPercMSCI Emerging Markets Index (BM0119)
Information Technology 31.96 28.47
Financials 22.53 23.02
Consumer Discretionary 20.53 10.24
Consumer Staples 7.10 6.23
Energy 7.07 6.89
Materials 5.57 7.15
Industrials 2.73 5.45
Health Care 1.82 2.34
Real Estate 0.60 2.81
Telecommunication Services 0.46 4.88
Utilities 0.21 2.52
Cash & Cash Equivalents -0.58 0.00

Country weightings As of 31/10/2017

CountryTEMITBenchmark
China / Hong Kong 22.02 29.68
South Korea 14.79 15.66
Taiwan 10.66 11.83
Brazil 9.36 7.08
Russia 7.86 3.23
India 5.73 8.72
South Africa 5.64 6.31
Thailand 5.04 2.20
Indonesia 3.94 2.19
United Kingdom 3.31 0.00
Rest of the world 12.24 13.10
Cash & Cash Equivalents -0.58 0.00

GEARING

TEMIT has the ability to borrow money for investment purposes. The Board has agreed that the Company may borrow up to 10% of its net assets.

Net Gearing: 0.2% as at 31/10/2017

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Market breakdown [further-information] As at 31 October 2017

Emerging 93.9%
Frontier 2.4%
Developed 4.3%
Total 100.6%

Portfolio Characteristics As at 31 October 2017

Number of Holdings 95
Dividend Yield [further-information] 2.25%
Price to Earnings [further-information] 15.17
Price to Cashflow [further-information] 8.10
Price to Book [further-information] 1.96
Weighted Average Market Capitalisation (billion) [further-information] £ 75.25

Performance

The prices of shares and income from them can go down as well as up, and investors may not get back the full amount invested. Past performance is not a guarantee or indicator of future performance. Currency fluctuation may affect the value of overseas investments. In emerging markets, the risks can be greater than in developed markets An investment in TEMIT entails risks which are described in the annual report.


Discrete Performance to the end of the last quarter

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Quarterly Commentary (as of 30 September 2017)

Emerging-market (EM) equities significantly outperformed their developed-market counterparts over the third quarter of 2017 despite a slight pull back in September.

For the quarter as a whole, some of the main drivers of EM performance were generally encouraging economic data from China, signs of economic recovery and hopes for reform in Brazil, a strong rebound in global commodity prices based on firming demand, and EM currency strength against the weaker US dollar.

Portfolio Changes & Positioning

Investments in South Korea, the US and Mexico were increased the most. In terms of sectors, some additions were undertaken in financials and telecommunication services. Positions in a number of companies were divested, as well as a reduction in holdings in China, India and Saudi Arabia. Holdings in the consumer discretionary, information technology and energy sectors were decreased.

Performance Attribution

Stock selection in consumer discretionary and financials was by far the largest performance contributor. Positive stock selection in consumer staples and an underweight position in telecommunication services also had a positive impact. Geographically, stock selection in China and South Africa, and Brazil and Russia (where overweight exposures also helped) contributed to relative performance. Industrials and information technology had a negative impact. In terms of markets, stock selection in Indonesia, Thailand and Hungary detracted. An overweight exposure to Pakistan also pressured returns.

Outlook

We remain optimistic about opportunities amongst EM equities in the current climate, while being mindful of potential risks. We continue to proceed with our value-oriented investment process, taking into consideration market sentiment, and we believe it is important for investors to be globally diversified. Overall, we believe that the investment case for emerging markets continues to centre around demographics and the dramatic transformation of many emerging stock markets that used to depend on ‘old-economy’ models (such as commodities or infrastructure) moving into more innovative, value-added products and services.

QUARTERLY PERFORMANCE ATTRIBUTION

Largest Contributors to Performance [further-information] (3 months to 30.09.2017)

Securities - Largest ContributorsSectorCountryTotal Effect (%)
Brilliance China Automotive Consumer Discretionary Hong Kong / China 2.52
CIA Hering Consumer Discretionary Brazil 0.46
Banco Bradesco Financials Brazil 0.37
Itau Unibanco Financials Brazil 0.25
S-Velame Administracao De Recursos E Participacoes SA Consumer Discretionary Brazil 0.25

Largest Detractors to Performance [further-information] (3 months to 30.09.2017)

Securities - Largest DetractorsSectorCountryTotal Effect (%)
Astra International Consumer Discretionary Indonesia -0.50
Hyundai Development Co Industrials South Korea -0.42
ICICI Bank Ltd Financials India -0.25
Catcher Technology Co Ltd Information Technology Taiwan -0.22
Daelim Group Industrials South Korea -0.18

Largest Contributors to Performance [further-information] (3 months to 30.09.2017)

Sector

Total Effect (%)
Consumer Discretionary 3.14
Financials 1.01
Consumer Staples 0.32
Telecommunication Services 0.23
Cash & Other Net Assets 0.21
Energy -0.01
Materials -0.02
Utilities -0.06
Health Care -0.12
Information Technology -0.24
Real Estate -0.26
Industrials -0.38

Country - Largest Contributors

Total Effect (%)
Hong Kong / China 1.89
Brazil 0.94
Russia 0.57
South Africa 0.40
South Korea 0.19

Country - Largest Detractors

Total Effect (%)
Indonesia -0.56
Thailand -0.24
Hungary -0.15
Pakistan -0.11
Chile** -0.09

Risks

Risk Statistics (As of 30/09/2017)

1 year3 years
Alpha [further-information] 7.58 -1.03
Beta [further-information] 0.96 1.05
Annualised Downside Risk [further-information] 1.59 4.49
Information Ratio (Relative) [further-information] 2.44 -0.13
R2 [further-information] 93.77 90.03
Sharpe Ratio [further-information] 2.07 0.63
Annualised Tracking Error [further-information] 3.28 5.57
Annualised Volatility [further-information] 12.97 17.45
Positive Months [further-information] 8 21
Negative Months [further-information] 4 15

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Dividends

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