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 30/06/2017

Total Net Assets [further-information] £2,160.57 million
Market Capitalisation [further-information] £1,888.43 million
No of shares in issue 279,974,440
Net Gearing [further-information] 2.6%
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ChargesAs of 30/06/2017

Ongoing Charge [further-information] 1.20%

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 As of 30/06/2017

SectorPercMSCI Emerging Markets Index (BM0119)
Information Technology 31.27 26.63
Financials 21.72 23.59
Consumer Discretionary 21.61 10.56
Consumer Staples 8.16 6.79
Energy 7.78 6.55
Materials 6.28 7.09
Industrials 3.33 5.73
Health Care 2.15 2.39
Real Estate 0.63 2.66
Utilities 0.30 2.61
Telecommunication Services 0.15 5.39
Cash & Cash Equivalents -3.37 0

Country weightings As of 30/06/2017

CountryTEMITBenchmark
Hong Kong / China 22.95 27.90
South Korea 13.61 15.61
Taiwan 11.14 12.48
Brazil 9.74 6.62
Russia 7.42 3.16
India 6.48 8.81
Thailand 5.48 2.17
South Africa 5.45 6.56
Indonesia 4.95 2.46
United Kingdom 3.83 0
Rest of the world 12.32 14.24
Cash & Cash Equivalents -3.37 0

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: 2.6% as at 30/06/2017 ​

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Market breakdown [further-information] As at 30 June 2017

Emerging 96.9%
Frontier 2.1%
Developed 4.4%
Total 103.4%

Portfolio Characteristics As at 30 June 2017

Number of Holdings 89
Dividend Yield [further-information] 2.32%
Price to Earnings [further-information] 15.67
Price to Cashflow [further-information] 7.92
Price to Book [further-information] 2.09
Weighted Average Market Capitalisation (billion) [further-information] £ 62.98

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 June 2017)

Emerging markets (EM) outperformed their developed-market counterparts for the sixth consecutive month in June. Encouraging economic data from China, fund inflows and corporate earnings growth were among the key drivers of performance.

Commodity prices declined over the second quarter despite a late-June rally. Oil spot prices declined by 9% in the quarter and benchmark Chinese iron ore spot prices fell by 19% over the period.

Asia was the top-performing region for the quarter with China, South Korea and Taiwan among the best performers. The IT sector was a key driver of performance across the region.

Latin America was among the weakest-performing regions, largely due to lower oil prices and the political turmoil in Brazil. Russia was among the weakest performers in Europe and globally, on investor concerns over the impact of lower oil prices and additional US sanctions. Macroeconomic data, however, point towards a recovery in Russia.

Portfolio Changes & Positioning

Investments in Brazil, India, South Korea and Russia were increased the most. In terms of sectors, investments were made in financials, health care and materials.

The Investment Manager divested positions in a number of companies, as well as reducing holdings in a number of existing positions in China, Pakistan, Mexico and Saudi Arabia. Holdings in the information technology, consumer discretionary and telecommunication services sectors were also decreased.

Performance Attribution

Stock selection in financials (underweight relative to the benchmark Index), information technology (overweight) and industrials (underweight) contributed the most, whereas energy and consumer discretionary had a negative impact. Geographically, stock selection in Taiwan, China, South Africa and Brazil had a positive impact, but overweight exposures to the US and Pakistan, and stock selection in Peru and Turkey, detracted the most.

Outlook

We believe that emerging markets continue to offer superior growth compared with developed markets. The long-term trend of increased consumer penetration and improving affluence, leading to a shift to more premium products and services, should continue to bode well for these markets in the future. The fundamentals of emerging-market equities also remain attractive.

QUARTERLY PERFORMANCE ATTRIBUTION

Largest Contributors to Performance [further-information] (3 months to 30.06.2017)

Securities - Largest ContributorsSectorCountryTotal Effect (%)
Hon Hai Information Technology Taiwan 0.35
Ping An Insurance Financials Hong Kong / China 0.33
ICICI Bank Financials India 0.19
Brilliance China Automotive Consumer Discretionary Hong Kong / China 0.19
Samsung Electronic Information Technology South Korea 0.16

Largest Detractors to Performance [further-information] (3 months to 30.06.2017)

Securities - Largest DetractorsSectorCountryTotal Effect (%)
Glenmark Pharmaceuticals Health Care India -0.21
MCB Bank Financials Pakistan -0.23
Massmart Holdings Consumer Staples South Africa -0.23
Buenaventura Materials Peru -0.29
IMAX Consumer Discretionary United States -0.36

Largest Contributors to Performance [further-information] (3 months to 30.06.2017)

Sector

Total Effect (%)
Information Technology 0.62
Financials 0.38
Industrials 0.23
Telecommunication Services 0.22
Utilities 0.16
Cash & Other Net Assets 0.15
Materials 0.11
Health Care -0.09
Real Estate -0.11
Consumer Staples -0.12
Energy -0.32
Consumer Discretionary -0.62

Country - Largest Contributors

Total Effect (%)
Taiwan 0.66
Hong Kong / China 0.50
South Africa 0.18
Kenya 0.14
United Kingdom 0.13

Country - Largest Detractors

Total Effect (%)
South Korea -0.10
Mexico -0.12
Pakistan -0.22
Peru -0.30
United States -0.36

Risks

Risk Statistics (As of 30/06/2017)

1 year3 years
Alpha [further-information] 5.77 -2.13
Beta [further-information] 0.96 1.05
Annualised Downside Risk [further-information] 2.51 4.49
Information Ratio (Relative) [further-information] 1.44 -0.37
R2 [further-information] 88.76 90.65
Sharpe Ratio [further-information] 2.79 0.51
Annualised Tracking Error [further-information] 4.05 5.37
Annualised Volatility [further-information] 11.98 17.37
Positive Months [further-information] 9 21
Negative Months [further-information] 3 15

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Dividends

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