Templeton Emerging Markets Investment Trust
Launched in 1989, Templeton Emerging Markets Investment Trust has built an excellent track record of investing in emerging economies by focusing on high-quality businesses with strong balance sheets, good cash flow generation and attractive valuations.
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Chetan Sehgal, Co-manager Chetan Sehgal is senior managing director and director of portfolio management for Franklin Templeton Emerging Markets Equity. Prior to joining Franklin Templeton in 1995, Chetan was a senior ratings analyst for the Credit Rating Information Services of India, Ltd. He earned a B.E. mechanical (Hons) from the University of Bombay and a post-graduate diploma in management from the Indian Institute of Management in Bangalore, where he specialised in finance and business policy and graduated as an institute scholar. Chetan speaks English and Hindi and is a Chartered Financial Analyst (CFA) charterholder.
Andrew Ness, Co-manager Andrew Ness is co-manager of the Global Emerging Markets strategy at Franklin Templeton. Prior to joining Franklin Templeton in September 2018, Andrew was a portfolio manager at Martin Currie, an Edinburgh-based asset manager. He began his career at Murray Johnstone in 1994 and worked with Deutsche Asset Management in both London and New York before joining Scottish Widows Investment Partnership in 2007. Andrew holds a B.A. (Hons) in Economics and an MSc in Business Economics from the University of Strathclyde in the UK. He is an Associate Member of the UK Society of Investment Professionals and a member of the CFA Institute.
Chetan Sehgal, Co-manager Chetan Sehgal is senior managing director and director of portfolio management for Franklin Templeton Emerging Markets Equity. Prior to joining Franklin Templeton in 1995, Chetan was a senior ratings analyst for the Credit Rating Information Services of India, Ltd. He earned a B.E. mechanical (Hons) from the University of Bombay and a post-graduate diploma in management from the Indian Institute of Management in Bangalore, where he specialised in finance and business policy and graduated as an institute scholar. Chetan speaks English and Hindi and is a Chartered Financial Analyst (CFA) charterholder.
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Andrew Ness, Co-manager Andrew Ness is co-manager of the Global Emerging Markets strategy at Franklin Templeton. Prior to joining Franklin Templeton in September 2018, Andrew was a portfolio manager at Martin Currie, an Edinburgh-based asset manager. He began his career at Murray Johnstone in 1994 and worked with Deutsche Asset Management in both London and New York before joining Scottish Widows Investment Partnership in 2007. Andrew holds a B.A. (Hons) in Economics and an MSc in Business Economics from the University of Strathclyde in the UK. He is an Associate Member of the UK Society of Investment Professionals and a member of the CFA Institute.
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Investment process
Chetan has the support of a huge global research platform at Franklin Templeton, who use their detailed local knowledge to uncover emerging market investment opportunities from around the world, including small and medium-sized companies. The trust is supported by 70 investment professionals across 17 countries, meaning it has a very strong on-the-ground presence.
Chetan focuses on high-quality businesses with strong balance sheets, good cash flow generation and attractive valuations.
The investment process is geared around three specific areas. These are structural long-term opportunities (such as the rise of technology; growth of consumption and changing demographics); sustainable earnings – finding and investing in companies with sustainable earnings power on attractive valuations; and responsible stewardship - integrating ESG factors within the investment research process and engaging with companies as active owners for their clients.
Stock selection is the primary driver of returns for this style-agnostic portfolio. The result is a high-conviction offering of 60-80 names – with the top 10 typically accounting for around 40% of the final portfolio. The balanced approach is designed to offer investors a portfolio which can succeed in all market conditions.
Templeton Emerging Markets Investment Trust is multi-cap in nature but will have most of its holding in large-caps.
Risk
It should be noted that historically, emerging market companies (and investments in their shares) have shown greater volatility and may be subject to certain political and corporate governance risks which are not typically associated with more developed markets and economies. However, risk is mitigated by the extensive analysis conducted by the research team which covers each stock in the investment universe. Most of the individual risk comes at both the stock selection and country exposure levels. It should be noted that the managers seek to build a balanced portfolio, limiting downside performance due to style risk.
ESG
Templeton Emerging Markets Investment Trust does not have a specific sustainable investment objective, however, the managers and research analysts review ESG credentials throughout the investment process. The board believes that being a responsible steward is acknowledging that governance and sustainability issues create financial risks and opportunities for companies. This sees the trust focus on numerous issues including ESG research integration throughout company engagement, proxy voting and policy advocacy. Templeton Emerging Markets Investment Trust is also committed not to invest in debt or equity securities issued by companies that they believe are confirmed producers of controversial weapons.
Templeton Emerging Markets Investment Trust employs a proprietary three-pillar ESG research framework to guide its analysis and engagements: Intentionality, Alignment and Transition. This framework helps assess how committed a company is to managing material ESG risks, how its products align to positive societal and environmental outcomes and its potential to improve over time. The trust also has the benefit of Franklin Templeton’s Global Sustainability Strategy which focuses on new trends and runs independent research.
Gearing
The trust may borrow up to 20% of net assets measured at the time of borrowing.
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