Posted inEmerging MarketsEquities

Mobius move a sign of the growth and value gap?

“I keep emphasising to people that they should not think I am making my decisions based on $130 to $140 per barrel of oil; I am basing my decisions on $70 oil,” he told me in June 2011.

“Any company we own will make money at $70 per barrel,” he stressed. “I sincerely believe the trend will go up, but variation between that trend will be extreme and volatility will increase.”

Back then Brent Crude traded as high as $120 per barrel, more than double the $58 achieved today.

While it may be unfair to place too much emphasis on past quotes, Mobius has stuck to his guns, telling CNBC in April that he was positioned for a recovery in the beleaguered asset class.

Fair play to him, though over three years the trust has lost investors 2%, compared to a 12% return from the IT Global Emerging Markets Equities sector and 10% from MSCI Emerging Markets.  

Energy (20%) and consumer discretionary (17%) remain a fair chunk of the portfolio, alongside financials (25%), while a big holding in China has hit performance recently, as it would all emerging market funds.

“Mobius has always had a contrarian approach and clearly the market hasn’t favoured that approach because the momentum has been outside of those that have benefited from rising commodity prices,” says John Husselbee, head of multi-asset at Liontrust.

“Mobius has always taken a value approach, it’s always been long term and I think we are at the point where perhaps the gap between value and growth is at its maximum.”

While recent history may not have been kind, there’s no accusing of Mobius of failing over the long term. He has after all been with the same company since the 1980s, been called the “dean of emerging markets” and has his own Manga cartoon to boot.

“Dr Mobius had established himself as one of a few of leading fund managers in the global emerging markets space over the past 26 years, and over the past 10 years he has returned 184% compared to the MSCI Emerging Markets index returning 135%,” says Adrian Lowcock, head of investing at AXA Wealth.

Part of the Bonhill Group.