Mobius Investment Trust PLC 

(LSE:MMIT

 Active Ownership in Emerging and Frontier Markets 

Investment Strategy 

Mobius Investment Trust plc’s objective is to deliver

long-term absolute returns by investing in emerging and

frontier market equities. MMIT will identify companies with resilient business models which are undervalued and mispriced. MMIT does not use any benchmark and follows an active investment style by partnering with portfolio companies.

This is achieved by engaging with stakeholders to improve corporate governance, set out a broader ESG pathway and

act as a catalyst for wider operational and financial improvements.

                          

 

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Over February 2020, the threat of COVID-19 shifted from predominately an emerging market issue to one that has significant implications for the global economy. As previously mentioned, (see January 2020 MMIT factsheet), our original expectation had been that the macro economic impact on emerging markets would be more severe than the 2003 SARS pandemic, as China’s economy is now larger and more integrated with neighbouring economies. This has now become a certainty. Black swan events of this nature are rare but not unprecedented. It is at times such as these, that our decades of experience over multiple market cycles and crises assists us in weathering the storm.

 

Recent data and newsflow from China has started to indicate that we are seeing a strong decline in new cases in both Hubei, the suspected source of the outbreak, and across the country in general. A survey by Made-in-China.com—one of the main platforms connecting Chinese suppliers and global buyers—found that by late February, 80% of manufacturing firms had resumed operations.

 

This new post crisis landscape across emerging markets is likely to create opportunities. We expect that companies with a strong balance sheet, will be much more likely to weather the storm and capture market share from overly levered peers. The MMIT portfolio has an average net debt to EBITDA of x0.4, in comparison to x2.6 for the MSCI EM Mid Cap Index (the benchmark we feel most close represents our market segment) so many of our companies should be well placed to capitalise.

 

Over February 2020, the top three largest contributors to performance were AK Medical (+2.7%), Polycab India (0.5%) and Yum China (+0.3). Mail.Ru (-0.7%), Cogna Educacao (-0.6%) and Hugel (-0.6%) were the largest detractors. MMIT’s NAV has outperformed the MSCI EM Mid Cap Index by + 5.7% in February 2020 and +13.0% between September 2019 and February 2020, primarily driven by individual stock selection (+11.2% over the 6 months). Given the strong performance of some holdings over this period, we trimmed a number of positions at the end of January. This has contributed to the 13.6% cash level, which we are now looking to deploy as a number of investment ideas have fallen to attractive valuations resulting from the recent sell-off across global markets. GBP appreciated against key portfolio currencies including Brazilian Real (+3.99%), Turkish Lira (+3.09%) and Mexican Peso (+1.04%) while depreciating against Indian Rupee (-2.03%) and Polish Zloty (-1.18%).

Commentary - 29 February 2020

Risks 

MMIT pursues an active management style. Its performance may therefore deviate considerably from that of a comparable market return 

 

Pronounced fluctuations in price are characteristic of emerging and frontier economies. Other characteristics include specific risks such as lower market transparency, regulatory hurdles, illiquidity of markets as well as political and social challenges 

Investments via Shanghai or Shenzhen Stock Connect are subject to additional risks, quota limitations, custody risk, clearing/settlement risk and counterparty risk 

Focusing intentionally on stocks in small and medium cap companies may entail additional risks (e.g. lower liquidity).

Risk Warnings: This document is issued by Mobius Investment Trust plc for information purposes only and does not constitute an offer or invitation to purchase shares in the Company and has not been prepared in connection with any such offer or invitation. Nothing in this document should be construed as investment advice or a recommendation to buy or sell shares. Before investing in the Company, or any other investment product, you should satisfy yourself as to its suitability and the risks involved, and you may wish to consult a financial adviser. Any return you receive depends on future market performance and is uncertain. Past performance cannot be relied on as a guide to future performance. The Company does not seek any protection from future market performance, so you could lose some or all your investment. Shares of the Company are bought and sold on the London Stock Exchange (LSE). The price you pay or receive, like other listed shares, is determined by supply and demand and may be at a discount or premium to the underlying net asset value of the Company. Usually, at any given time, the price you pay for a share will be higher than the price you could sell it for. For further information on the principal risks the Company is exposed to please refer to the Company’s Investor Disclosure Document available on our website. The Company can borrow to purchase investments, this could potentially magnify any losses or gains made by the Company.

Mobius Investment Trust plc has used all reasonable efforts to ensure the accuracy of the information contained in this document but makes no guarantee or representation as to the reliability, completeness or accuracy of such information.

Mobius Investment Trust plc is a public limited company whose shares are premium listed on the LSE and is registered with HMRC as an investment trust. The Company has a Redemption Facility through which shareholders will be entitled to request the redemption of all or part of their holding of Ordinary Shares on a periodic basis. The first Redemption point for the Ordinary Shares will be 30 November 2022 and each subsequent Redemption point shall fall on 30 November every third year thereafter.

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The value of investments can go down as well as up and you may get back less than you invested. 
We provide information about investments but do not offer personal advice and recommendations. We do not hold responsibility for assessing the suitability of an investment or evaluating the risks of such an investment for you.  If you are in any doubt as to these risks or the suitability of an investment.  Y
ou should seek independent advice.

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