James Carthew: How Mark Mobius taught investors to find opportunity in volatility
The emerging markets legend who passed away last week made some bold moves in challenging market conditions.
The death of Mark Mobius last week, who fully deserved his reputation as a legendary emerging markets investor, made me think about hearing him speak for the first time in the mid-1990s.
Templeton Emerging Markets (TEM) launched in May 1989, two years on from the launch of its US closed-end version. By the time that I began running the M&G Fund of Investment Trust Shares in 1995, TEM investors had already been on a rollercoaster ride.
Following the outbreak of the First Gulf War, early gains of over 50% were wiped out leaving shareholders nursing a loss. However, the recovery that followed was even more dramatic – you could have made about five times your money trough to peak – but then came the 1994/95 Mexican Peso crisis.
Mark’s messages were simple – emerging markets were exciting places to invest, economic growth was far higher than in the developed world, and volatility was a fact of life so use it your advantage. Aim to buy at the bottom when everyone else is panicking – buy cheap, buy what is unpopular – and, having learnt the hard way, back people you can trust.
Mark bought stocks in the face of the Mexican crisis, and convinced investors to back a £100m C share and warrant issue in 1996. That now feels remarkable, but the trust had also managed to raise money in 1990, 1992, 1993, and 1994. Perhaps investors were just braver back then, or more willing to take a long-term view.
The next crisis came in 1998 with… read more here