(Jan 26): After decades at the forefront of emerging-market investment, Mark Mobius is heading into retirement betting the best is yet to come.
The 81-year-old money manager kicked off his final television interview before leaving Franklin Templeton Investments on Wednesday predicting developing-nation stocks will set a fresh record this year. That echoed his December forecast that emerging shares will likely surpass the 2007 peak by 20 percent, though he didn’t give a timeframe then.
“We’re going to see a pretty good market this year,” Mobius said in a Bloomberg Television interview. Earnings momentum will determine which emerging companies perform well in an environment of rising global interest rates, he said.
Brazil, Africa, Vietnam and parts of Latin America are attractive due to their exposure to commodities or rising consumer spending, according to Mobius. Commodity-related investments will even outperform technology shares, partly because they’ve been undervalued for a long time, he says. The MSCI Emerging Markets Index rose for a 11th day on Friday, set for the longest winning streak since April 2015. It’s about 6 percent below its record high reached in 2007.
As Mobius heads off into the sunset, here are six things you may not have known about the emerging-market legend:
Getting It Right
Mobius has made prescient calls on some major market movements. He correctly predicted the start of a bull market that began in 2009, snapped up bargains during the Asian financial crisis after Thailand floated its currency in 1997, and bought Russian stocks as panic selling took hold in Russia in 1998. He was also one of the first institutional investors to identify Africa as a promising frontier market, setting up the Templeton Africa Fund in 2012.
“The real important change has been the political change — they’ve moved from socialist, dictator governments to a market-economy model and that is the most incredible change that we’ve seen globally in every continent in most every country,” said Mobius in the Friday interview. “The process is still continuing.”
But Not Always Right
Still, the investment thesis that Mobius has come to represent has underperformed in recent years. MSCI’s emerging gauge is up 166 percent since its 2009 low, compared with the MSCI World Index’s 224 percent surge.
And Mobius himself has had some tough times. After losing a third of his fund’s value in the October 1987 stock-market crash during his first year at Templeton, he decided to diversify his holdings from just five Asian countries to emerging markets such as Argentina, Mexico, Indonesia and Russia. The Templeton Developing Markets Trust, which he co-managed from 1991 to 2017, trailed 80 percent of its peers over the past 15 years, Morningstar data show.
Born in Hempstead, New York to a German father and Puerto Rican mother, Mobius grew up on Long Island speaking German and Spanish at home. In 1955, he won a scholarship to study at Boston University and worked as a pianist at a nightclub to help pay for his tuition. He graduated with a bachelor’s degree in fine arts and a master’s in communications before completing a doctorate in economics and political science at Massachusetts Institute of Technology.
Yul Brynner Hairstyle
Mobius has described his hairstyle as resembling that of film and stage actor Yul Brynner. The look was conceived in the late 1960s after a fire in his apartment damaged his hair and he shaved the rest off, according to a 1997 illustrated memoir.
Around the same time, he started his own research business, branching into securities analysis. Then at age 50, he received a phone call from John Templeton, a pioneer in emerging-markets investing, that led to his three-decade career at the fund manager.
Books He Wrote
Mobius published more than 10 books on investing and economics, including “The Investor’s Guide to Emerging Markets” (1994). And a Japanese publisher has glorified his globe-trotting exploits with a manga-style comic book, chronicling the “Bald Eagle.”
While Mobius is set to step down in less than a week, this won’t be the last of him as an investor — he has even revealed his model portfolio.
“I’m not retiring,” he said. “I will still continue to invest. But what I would do is and I’m doing is first of all, keep about 20 percent in cash because markets are high. You might want to take advantage of a downturn. And then put about half of the rest in emerging markets generally, globally and the other half in commodity-oriented companies.”
Source: The Edge Markets