Fund Profile

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Disclosure – Non-substantive Research

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

Overview
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Overview

Mobius Investment Trust (MMIT) invests in small and mid-cap companies across the emerging and frontier market universes, aiming to generate total returns of 12-15% over the long run from a highly concentrated portfolio of 20 to 30 stocks.

The trust aims to be highly active and does not have a formal benchmark. The intention is to exploit the inefficiencies in the small-cap markets and to use a “private equity” method of investing. This consists of buying undervalued companies and engaging with management to unlock the value. As well as more traditional operational improvements, the trust will encourage improvements in the ESG performance of portfolio companies believing that this is not only good in itself, but also accretive to shareholder returns.

Although there is no targeted amount for the dividend, one will be paid from 2020, with the intention being for the income to be a meaningful contributor to total return as time goes on.

The trust is managed by 30-year veteran manager Mark Mobius as well as his former colleague and successor on the Templeton Emerging Markets Trust Carlos Hardenberg and Greg Konieczny, another former Franklin Templeton workmate.

MMIT, which raised £100m before launch, is trading on a premium of 1.2% and has begun to issue shares under a tap issue which allows it to issue up to 20,000,000 shares in total.

Although it has the ability to gear up to 20%, it has not yet made any borrowings, and is roughly 85% invested.

Kepler View

The trust's highly-concentrated approach and private equity-inspired strategy are interesting in our view and offer the possibility for alpha generation over the long term. However, it is hard to justify allocating to this fund on a premium while there are other small-cap GEM funds trading on substantial discounts.

Bull Bear
A highly experienced management team The trust is trading on a premium
High alpha generation potential, being concentrated and focused on smaller companies A concentrated portfolio increases the downside from individual stock picks
Emerging markets are at low valuations An ESG-heavy approach could lead to a light allocation to China, which could hurt if that market outperforms
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The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
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