Mobius (MMIT), the £113m emerging markets smaller companies trust, has bounced back from a difficult 2025 with a first half leap of 23% helped by gains on suppliers to the artificial intelligence (AI) revolution while cutting losses from AI losers.
The underlying return in net asset value (NAV) underpinned a 22.2% advance for shareholders in the six months to 31 May and beat the 21.1% rise in the MSCI Emerging Markets Mid Cap index.
Although a narrow level of outperformance, the half-year result is a big improvement on the financial year to 30 November when the investment trust’s 6.9% return badly lagged the benchmark’s 21.9% on account of fund manager Carlos Hardenberg’s caution towards China whose stock market rallied after a challenging few years.
Mobius has also made a good start to the second half with the latest factsheet showing the portfolio gained 5.1% in June, well ahead of the MSCI index’s 0.8% sterling return.
Gyula Schuch, the trust’s new chair, welcomed the strong result which enabled Mobius to recoup 30% of the assets withdrawn by shareholders in its bi-annual redemption window last November when the company shrank by 43%.
Schuch, a partner at investment manager VCP Vienna who succeeded Maria Luisa Cicognani at the helm of the board, said it was “disappointing” that MMIT’s “excellent” performance since launch in October 2018 had not been recognised by some investors.
At the end of May, MMIT, which was named after emerging markets pioneer Mark Mobius, had delivered 7.2% annualised growth to shareholders, although an 11.7% share price discount meant investors did not get the full 9.3% average annual portfolio return since its debut.
He said: “Such a sizeable redemption was, in reality, a reflection of the state of the investment market in the UK, with significant outflows of money from both investment trust and open-ended collective investment schemes throughout the last three years.
“As retail investors exited the register, their shares were largely absorbed by value and discount arbitrage investors, some of whom subsequently used the redemption facility to monetize the discount to NAV.”
Hardenberg said the portfolio’s biggest gains came from companies in the AI supply chain such as Taiwan’s Elite Material, a provider of advanced copper-clade laminates used in data centres, and ASPEED, another Taiwanese company whose server management chips were snapped up by AI developers looking to train their large language models (LLM).
The biggest detractors to performance included travel companies Trip.com of Singapore and MakeMyTrip of India which the manager sold as investors became increasingly concerned about the competitive threat of AI search engines.
Hardenberg also sold enterprise software providers EPAM Systems and TOTVS on AI disruption fears, redeploying the money in to companies benefiting from the Ai infrastructure boom as well as Indian holdings such as digital wealth managers Groww and Nuvama and also video security and surveillance company Aditya Infotech.
Our view
Matthew Read, senior analyst at QuotedData, said: “These are a decent set of results for MMIT which has benefited from the manager’s decision to reposition the portfolio as the implications of AI become clearer. It is also encouraging to see this NAV and share price growth coming through after last year’s sizeable redemption although, with the shares still trading on a c10% discount, there’s room for further upside, particularly if the manager can continue to outperform.”
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