Mark Mobius’ successor exits Franklin Templeton

Funds and Investment Trusts February 1, 2018 by Tom Bailey

Emerging market investor Carlos Hardenberg has resigned from Franklin Templeton Investment Management.

Hardenberg, who managed Franklin Templeton’s Templeton Emerging Markets Investment Trust (TEMIT), is due to leave at the end of March. He will be succeeded by Chetan Sehgal, who works alongside Hardenberg. 

Hardenberg took over as TEMIT’s lead manager in October 2015, taking the reins from 30-year veteran emerging market investor Mark Mobius. 

Hardenberg took over TEMIT after a period of poor performance for the trust. However, he managed to steady the ship and turnaround the trust’s fortunes. Since Hardenberg took over the net asset value of the fund grew by 100.9 per cent. In comparison, total return of the MSCI Emerging Market Index (measured in sterling) sat at 76.1 per cent for the same period. TEMIT’s share price has doubled over the period, from 404p to 815p.  

The upturn in performance was achieved by a major realignment of TEMIT’s portfolio, with an increased focus on both China and technology stocks. Before Hardenberg took over, TEMIT’s weighting of technology stocks was just 6 per cent – it now stands at 31 per cent. 

The trust now has significant holdings in Asian technology firms, including Chinese tech giants Alibaba (4 per cent) and Tencent (3.4 per cent). It also holds 8.1 per cent in South Korea’s Samsung Electronics. 

At the same time the trust reduced its holdings in both energy and financials.

Source: Company & Numis Securities Research

There is not expected to be a major change in the strategy or investment style following Hardenberg’s departure. 

As TEMIT Chairman, Paul Manduca, noted, Hardenberg’s successor already plays a prominent role, noting Sehgal has been ‘directing Templeton’s global emerging markets strategy since October 2015.’

Sehgal joined Franklin Templeton in 1995 and is a senior managing director as well as the director of portfolio management for global emerging markets and small cap strategies.

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Stockbrokers Numis Securities also noted that there will be ‘no significant change in investment approach given that Carlos and Chetan worked closely together, and they have been jointly managing a number of portfolios.’ 

‘The similarity in approach is highlighted by TEMIT having over a 90 per cent portfolio overlap with Templeton Developing Markets, a $1.7bn US listed fund, for which Chetan is lead manager.’

The brokers, however, did caution: ‘We have been impressed by Carlos Hardenberg and his track record has been impressive since taking over TEMIT. As a result, the change in management inevitably raises some concerns.’

TEMIT is one of Money Observer’s 2018 Rated Funds and we will continue to monitor its performance closely in light of the management changes. 

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