Mark Mobius is regarded by many as the Indiana Jones of the investment industry.
Last week I looked at the career of Sir John Templeton, the pioneer of emerging market investing, who passed away last year. Templeton's major success story was Japan, and while we can only speculate as to where he might put his money if he was investing today, his work is carried on by his successor at Franklin Templeton, Dr. Mark Mobius.
Background and early career
Mobius was born in New York in 1936, and earned bachelor's and master's degrees from Boston University, followed in 1964 by a doctorate in philosophy, in economics and political science, from the Massachusetts Institute of Technology.
Having worked at Vickers da Costa and International Investment Trust Company, he joined Templeton in 1987, and founded the famous Templeton Emerging Markets Investment Trust (LSE: TEM), often referred to as TEMIT, in 1989. He is now the Executive Chairman of Franklin Templeton, which manages a wide range of emerging market funds.
Since its launch, the trust's shares have increased almost twelve fold, which is double the rate of growth achieved by the benchmark MSCI Emerging Markets Index, and equates to an annual return of 13.2% including dividends.
The fund is now valued exactly where it was a year ago, while the index is down by 23%, but it hasn't all been plain sailing; in 2008 TEMIT lost 41%, which was admittedly better than the 54% drop in the index.
Mobius credits much of this success to the influence of John Templeton. In a recent interview with Investors Chronicle, he claims "his thinking about investing -- his philosophy -- guides us on a daily basis".
And there is certainly a strong similarity between their approaches -- both are decidedly contrarian, aiming to find good companies that have been unfairly trashed by the market, and concentrating that search outside of the mainstream developed economies. Young populations are seen as a key driver of growth.
He spends most of his time traveling and meeting the management of companies, although in contrast to Templeton he travels by corporate jet. "At Templeton we like to get out from behind our desks." Not a fan of passive investing, he believes it's important to have people in the target country making investment decisions.
Buying in the face of adversity is his hallmark. "Problems, crashes, people jumping out of windows. That's my kind of place. One guy in Thailand in the stock exchange put a gun to his head and said, 'Make the market go up, or I'll shoot myself'. Fantastic. That's the kind of market I want to be in."
Which is not to say that he hasn't been hurt by market turmoil -- the Asian Crisis of 1997-98 caused big falls for TEMIT. He was also too quick to call the bottom of the current crisis, being actively bullish right through 2008. By the end of last year, he and his team were "like children in a candy shop".
To some extent, this general bullishness was a distraction from his core style, since his policy is to stay as fully invested as possible and to drip money into the market as it becomes available. In that sense, he is not a market timer; like Templeton, he works on the basic principle that, over the long term, equities beat cash.
TEMIT's biggest positions are in Brazil (22%), China (20.5%), and India (10.6%), with a focus on energy (24.7%), financials (23.3%), and materials (19.7%). He has also been putting money into Russia and is looking at the Baltics -- "we love bombed out countries".
Mobius suggests that the Chinese stock market could be as big as the US within three years, depending on the rate of privatisation by the Chinese government.
At the more extreme end of the spectrum, his target 'frontier' countries are Nigeria, Kenya and Vietnam. Iran, Iraq, Syria and Mongolia are also on his radar, although the availability of custodian banks and proper legislation are issues in some of these territories.
South Africa also gets his approval, with the possibility that President Jacob Zuma could be a positive force for the country, in the way that President Lula has been for Brazil. Venezuela and Argentina get the thumbs down in terms of political and economic environment, but there may be some specific companies that stand to gain from the chaos.
Perhaps the most negative of Mobius' predictions is his concern that we will face another financial crisis within the next five years, due to our failure to regulate financial derivatives.
Mobius has chosen to put his money in some of the riskiest areas of the world, and at the age of 72 the 'Indiana Jones' of the investment world still thrives on the challenge of investing profitably.
Books by Mark Mobius:
More investing greats:
John Bogle | George Soros | Ben Graham | Jim Rogers | Warren Buffett | Anthony Bolton | Jesse Livermore | Jim Slater | Charlie Munger | Peter Lynch | Carl Icahn | Philip Fisher | Ken Fisher | John Neff | John Templeton