Mobius Investment Trust (MMIT) has announced its annual results for the year ended 30 November 2020 (its second year of operations), during which MMIT provided strong NAV and share price total returns of +16.3% and +24.7% respectively. The chairman, Maria Luisa Cicognani, says that Emerging markets were particularly hard hit by the risk-averse sentiment in the wake of the pandemic which drove investors to withdraw more than $50 billion from EM equities in March alone. However, we saw a slow reversal of this trend was seen in Q3, which picked up strongly in November 2020, following the positive vaccine news-flow and the Biden victory (Biden’s win was coupled with the expectation of further stimulus action in the U.S.). She says that, overall, governments and central banks in the EM sector reacted well and swiftly to the pandemic by taking decisive action aimed at supporting the most vulnerable people and businesses. Markets have seen a strong recovery with the MSCI EM Index, rallying 70% at the end of 2020 from the lows in March.
[QD comment: MMIT has undeniably had a good financial year, aided by deploying a significant amount of cash at the bottom of the market. However, unlike CC Japan & Income which we have reported on this morning, MMIT’s year end is fortunately timed to include the vaccine rally of November, which has inevitably boosted its figures. Nonetheless, the managers have clearly been successful in navigating the crisis].
Performance drivers
When markets crashed back in March, MMIT’s manager set about deploying its then 14.3% cash position to add to a range of existing holdings during the downturn as well as building new positions which the manager felt had reached compelling entry level valuations. A number of these new holdings have contributed significantly to the strong performance of the Mobius Investment Trust in 2020. As of 30 November 2020, MMIT was almost fully invested with a cash position of 1.3% of Net Asset Value.
MMIT’s manager says that stock selection was an important driver of performance across geographies. Over the year, the top three largest contributors to performance were AK Medical (+5.3%), a market leader in orthopaedic implants in China, which has expanded its business towards new categories (spine and 3D printed implants) and profits from the growing demand for orthopaedic implants in China; eMemory Technology (+5.0%), a Taiwan-based technology company, which has seen a surge in demand for its services with the work from home drive and reaped the benefits of the on-going roll-out of 5G; and APL Apollo Tubes (+5.0%), a leading branded steel products manufacturer in India. MMIT’s manager says that its strategic actions taken during the pandemic resulted in significant market share gains.
Brazilian education company Cogna Educacao (-3.2%), Indian finance company Magma Fincorp (-1.8%) and Chinese durable juvenile products company Goodbaby International (-1.4%) were the main detractors as they suffered from the repercussions of the pandemic.