Mobius Investment Trust (MMIT) has announced its annual results for the year ended 30 November 2021, during which it provided NAV and share price returns of 44.9% and 50.0% respectively. The chairman, Maria Luisa Cicognani, comments that Emerging markets continued to show volatility in performance with the MSCI EM index returning just over 1% during the financial year ended 30 November 2021, which was due to a number of factors including Covid-19, inflation, central bank rates moves, China-US tensions and China’s regulatory crackdown on a number of sectors. However, strong investor interest for MMIT’s strategy drove a narrowing of the discount and since August 2021; to the end of the financial year, MMIT traded at an average premium of 0.5%.
Performance driven by stock selection
Stock selection was an important driver of performance across geographies. Over the period, the top three largest contributors to performance were eMemory Technology (+16.3%), 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, Indian software business Persistent Systems (+14.1%), and APL Apollo (+9.4%), the leading branded steel products manufacturer in India, whose strategic actions taken during the pandemic resulted in significant market share gains.
On the downside, Brazilian e-commerce business Americanas SA (-2.1%), Russian internet company VK (-1.6%), previously Mail.Ru, and Brazilian health care company Fleury (-1.5%) were the main detractors over the reporting period.
Portfolio Overview
As of 30 November 2021, MMIT had 87.0% of capital invested, with 27 holdings across 11 countries. The largest geographic exposure was India (24.3%), followed by Taiwan (19.9%), China (12.7%), and Brazil (8.3%). The largest sector exposure was Technology (35.5%), followed by Industrials (18.1%), Health Care (12.6%) and Consumer Discretionary (9.0%). The manager recently sold one holding and due to strong performance trimmed a number of MMIT’s large positions to comply with regulations and its risk parameters. The manager says that it is currently conducting due diligence on a number of strong, new investment ideas and expects to deploy existing cash levels carefully across both new and existing positions.
Manager’s comments on Russia and Ukraine
“At the time of writing the Russian invasion of Ukraine has sent shockwaves through Europe and financial markets. We carefully monitor geopolitical risks and developments and will closely watch the situation in the Ukraine as it unfolds. Investors are well advised to steer clear of regions which are subject to significant political risks. This is especially the case when there are risks of sanctions, a sharp increase in cost of capital, or worse, capital controls. Currency losses can be very significant, as we witnessed in the more recent history in Argentina or Turkey. We have sold our single investment in Russia at the end of 2021, and have a strong preference for countries with lower risks and better governance.”