Franklin Templeton Investments has unveiled the Templeton Global Emerging Markets fund, an Oeic that invests in emerging markets such as China, India, Brazil and Turkey.
The fund will be managed by the same team as the Templeton Emerging Markets investment trust and will hold between 100 and 150 stocks. The team is headed by Mark Mobius, who joined Templeton in 1987 and has over 30 years' emerging markets experience. He is supported by 23 portfolio managers and analysts located around the world.
The emerging markets team will take a bottom-up approach to stock selection. They will examine each company on an individual basis, analysing them thoroughly in terms of management, positive cashflows, earnings and dividend yields. Companies will be evaluated on a five-year horizon, with the aim of discovering successful companies which will also offer stability when markets fluctuate.
Mobius and his team will pick stocks without benchmark constraintsImportant to take a long-term view. Monitor the company and monitor the local economy from that company's perspective to reduce risk. Diversification to reduce risk, focus on larger more liquid shares and countries are ranked before they invest.
When selecting stocks, the team will construct the portfolio from an action list containing 600 stocks. The action list is produced by analysts who screen companies from a universe of around 14,000 stocks by looking at earnings, valuations and visiting the companies. Once constructed, the portfolio will be monitored weekly.
Fund managers are showing a lot of interest in emerging amrkets at the moment because the pace of growth is faster than in the West. These regions are less researched compared with the West so there is a greater chance for fund managers to discover promising companies that other managers are not looking at.
However, the risk s involved in emerging markets may mean that it is mainly sophisticated investors with diverse portfolios who will express an interest in this fund, and even then only as a small part of their overall portfolio.