Skip to the content

TEMIT vs JP Morgan: Which emerging markets trust is right for you?

20 July 2015

FE Trustnet compares and contrasts two global emerging markets trusts trading on double-digit discounts.

By Daniel Lanyon,

Reporter, FE Trustnet

Emerging market investing is all about buying and holding for the long term and ignoring the hot-bloodedness associated with the asset class. At least that is what the fund managers say.

More so than any other part of the investment world, emerging markets seem to lurch from one crisis to another but their longer term track record is astounding.

In the past 10 full calendar years they have been the best or worst performing equity market four times each and as far as our data goes back – 2001 – the MSCI Emerging Markets index has almost tripled the FTSE’s 102.25 per cent gain, making it the best performer.

Performance of indices since 2001


Source: FE Analytics

In the next article of our series examining which investment trusts to buy for the long term, we look at the relatively out of favour IT Global Emerging Markets sector and two venerable titans trading on double-digit discounts.

Mark Mobius has run the £1.6bn Templeton Emerging Markets Investment Trust (TEMIT) for the past 26 years but announced last week that he is to step back as its lead manager with Carlos Hardenberg taking the role. The £870m JP Morgan Emerging Markets similarly has been run by Austin Forey since 1994.

Ewan Lovett-Turner, analyst at Numis Securities, believes both trusts offer lots of experience from their wider emerging market portfolio teams as well as most importantly in their current manager, but Forey’s ongoing consistency as lead manager is seen as a notable plus and the departure of Mobius an important apprehension for investors

“Forey is a very experienced manager so that does provide a very solid option – a safe pair of hands. But with Hardenberg already being a known portfolio manager at TEMIT, it does answer some of the questions about Mobius moving over,” Lovett Turner said.


“However, Hardenberg is also quite frontier market focused and so there are a few other people within the group that hold senior positions [at the trust]. It will be interesting to see if that leads to any changes over time but I would say long term [TEMIT’s] value orientated approach is likely to stay.”

According to FE Analytics, the two trusts have stayed substantially ahead of the index since January 2001 – with TEMIT’s 450.52 per cent return trouncing the 396.35 per cent return of JPM Emerging markets.

However, the latter has been performing much better compared to the former in recent years. TEMIT is down over one, three and five years while the opposite is true for JPM Emerging Markets.

Performance of trusts and index since 2001


Source: FE Analytics

Global emerging markets have generally lived up to their volatile reputation this year, rising strongly in the first part of the year before crashing back down more recently.

Much of this has been due to the rollercoaster rise in China’s stock markets, which carried on a trend from the second half of last year, and the more recent falls from sky high valuations. This had pulled up the broader index substantially but also led to recent weakness as Chinese equities and stocks in the Asia region sold off.

TEMIT has had worst time over this period with the trust down 7.65 per cent in 2015 while the index has lost 1.44 per cent.  JPM Emerging Markets has


gained 1.51 per cent.

Performance of trusts and index in 2015

Source: FE Analytics

This contrast may well be partly due to the investment approach at the two trusts as well as geographic positioning.

“The process at TEMIT is very much a value-based approach and JP Morgan is quite different. It is more of a growth portfolio. Forey has a stock picking approach but is looking for quality growth companies, where there are strong management teams and strong market positions as well,” Lovett-Turner said.

“TEMIT has a much more value approach at the heart of the portfolio. With the changes in management I don't see a great deal of difference in the approach,” he added.

Another notable difference between the two trust portfolios is a hefty overweight to China in the case of TEMIT while Forey has been mostly staying clear of China stocks, preferring Taiwan and India. The two also have no stocks in common in their 10 largest holdings.

Both have large weightings to financials and are broadly in line with the index whereas TEMIT’s 30 per cent in basic materials is a huge overweight to the sector, alongside a further 25 per cent in consumer products. JPM also has a consumer products overweight as well as bullish position in technology stocks.

TEMIT has generally fallen harder when markets are weaker, such as in 2013 when emerging markets were hit by negative sentiment owing to the ‘taper tantrum and in 2015 so far. In both periods the fund fell to the sector’s bottom quartile. It is also one of the most volatile funds compared to index.

Both trusts are currently on a double-digit discounts: Templeton Emerging Markets at 10.7 per cent and JP Morgan Emerging Markets 10.1 per cent.

In terms of cost charges Templeton Emerging Markets is more expensive. It has an ongoing charges figure of 1.29 per cent while JP Morgan Emerging Markets comes in at a cheaper 1.17 per cent. Neither trust has any gearing.

Editor's Picks

Loading...

Videos from BNY Mellon Investment Management

Loading...

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.