Mobius Investment Trust (MMIT) announced its annual results for the year ended 30 November 2024. The company delivered a NAV total return of 5.2% marginally trailing the benchmark MSCI Emerging Markets Mid Cap index return of 6.6%. The share price total return was 5.1%, with shares now trading at a 8.2% discount. The manager noted several key factors which have contributed to performance including elections across developed and developing markets, interest rates, and technology developments including AI.
Discussing the performance and the outlook for the trust manager Carlos Hardenberg commented:
“Heading into 2025, we remain focused on our long-term strategy and the core fundamentals of our portfolio companies. Conversations with our portfolio companies in recent months have reinforced our cautiously optimistic outlook for 2025 and beyond as we believe that several of our portfolio companies have potential for revenue growth and margin improvements in 2025. For example, Elite Material, a leading producer of semiconductor materials, is preparing to supply its upgraded M8 material for a US cloud service provider’s ASIC (application-specific integrated circuit) in 2025, addressing the growing demand for AI processing and the need for customised solutions over NVIDIA’s GPUs (graphics processing unit). Similarly, Chroma has developed a unique device for its foundry client’s advanced packaging processes, ensuring precise alignment of stacked chip components—an essential capability for manufacturing next-generation AI chips.
“But no doubt uncertainties remain. Trump’s expanded political power raises the possibility of bold policy shifts that may reshape global trade dynamics in the years to come. While U.S. equities and the dollar have strengthened in response to Trump’s election, emerging markets face a more uncertain outlook due to the president’s aggressive tariff rhetoric. Yet, within challenges lie opportunities. Countries like India, Indonesia and Vietnam, for example, are already benefiting from the “China+1” strategy and appear well-positioned to attract new manufacturing investments. Their competitive labour markets, improving infrastructure, and supportive government policies make them increasingly appealing as companies seek to diversify supply chains and reduce dependency on China. At the same time, the U.S.’s heavy reliance on imports, particularly from China, reduces the likelihood of sweeping tariffs, which could risk significant domestic disruption.
“Emerging markets have previously responded to the above dynamics with increased trade diversification and reduced reliance on the dollar. During the 2018 trade war, for example, China shifted imports like soybeans to Brazil, a move that fuelled record bilateral trade. This pattern could reemerge under Trump’s renewed tariff threats.
“Additionally, nations such as India are advancing local currency trade agreements, fostering resilience against external shocks. Intra-EM trade, particularly within Asia set to rise from $4.3tn in 2023 to $7.1tn in 2030, has also grown significantly and is poised to accelerate further, offering emerging markets the chance to deepen their autonomy and global influence.
“Geopolitics remain an ongoing risk, with tensions in the Middle East, the Russia-Ukraine war, and China-Taiwan relations posing significant challenges. Our disciplined macro-overlay has been instrumental in navigating these complexities. This approach will remain central as we navigate 2025.
“Taken together, these interconnected factors paint a complex picture for 2025. While risks are evident, emerging markets could leverage this period of transition to strengthen resilience, diversify trade, and attract investment, positioning themselves as key drivers of global growth in the years ahead. Furthermore, emerging markets are essential for diversification, offering strong growth potential, attractive valuations, and innovative companies that play a key role in global supply chains. This is particularly important as the U.S. market, with the S&P 500 heavily concentrated in just seven companies accounting for around 28% of its market capitalisation at the end of 2024 and contributed over 50% of its returns during the year, poses significant concentration risks. Diversification into emerging markets provides investors access to a broader array of opportunities and mitigates the risks associated with over-reliance on a single, concentrated market. Furthermore, active investing in emerging markets allows for the discovery of lesser-known, quality companies that are often overlooked by the broader market, creating unique opportunities for long-term growth and value creation.
“We remain committed to seeking these companies in emerging markets—innovative leaders and unique opportunities. By focusing on these hidden gems, we aim to provide our investors with access to diverse growth prospects and long-term value in an evolving global landscape.”
