The outlook for mid and small caps in emerging markets remains favourable, although Carlos Von Hardenberg, manager of the £121.3m Mobius Investment Trust, warned that short-term volatility may remain in place.
This news follows the trust’s half-year results earlier today (29 July), which showed a return to growth for the fund after a challenging first half of 2025. In the six years to 31 May 2025, net asset value (NAV) return was down 8.2%.
The team attributed this to wider macro headwinds in the period, with market returns concentrated in a handful of mega-cap tech stocks and value-focused sectors.
By contrast, in today’s results Mobius had delivered a 23% NAV return to the end of May, with NAV per share rising from 136.4p (May 2025) to 193.5p. Share price per ordinary share, meanwhile, has risen to 170p, up from 129p during this period last year.
This leaves the share price at a 12.1% discount to NAV, according to the firm’s data.
Commenting on the results, Carlos Von Hardenberg, manager of the trust, said: “The six months to 31 May 2026 were characterised by strong equity market performance, although returns remained highly differentiated across sectors and companies.”
One area of focus for the team this year was the rise of artificial intelligence, and its potential impact on markets.
While Von Hardenberg said that AI was still in the early stages of a year-long investment cycle, the performance of many tech names means the manager has needed to become more selective.
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“This is a trend we have been monitoring closely and, having already begun repositioning the portfolio during 2025, we continued to refine portfolio positioning as AI capabilities evolved.”
Taiwan remains the trust’s largest absolute exposure at 32.6% of the total portfolio, but the rise of AI has caused the team to rotate some of its investments.
In the software sector, the team exited positions such as Trip.com or MakeMyTrip, where AI changes to search and booking could alter industry dynamics. The stock shed 1.8% over the period in question, according to the report.
The money from these exits was redeployed into other parts of AI infrastructure, Indian businesses such as Nuvama benefiting from rising savings, and digital security such as Aditya Infotech.
However, Von Hardenberg also identified non-AI-related investments as an area of interest for the team, including India, which is the firm’s second-largest regional exposure at 21%.
“Following a period of weaker market performance since October 2024, we believe the long-term investment case remains firmly intact, supported by resilient domestic demand, ongoing infrastructure investment and the continued financialisation of household savings,” the manager said.
Within this market, they’ve added to names such as Aditya Infotech, Groww and Nuvama.
A ‘disappointing’ redemption
That said, it has not been purely smooth sailing for the portfolio. In December 2025, the firm launched a 100% tender offer for shareholders, primarily due to the “significant outflows from both investment trusts and open-ended funds in the past three years.
Chair of the trustGyula Schuch said: “Such a sizeable redemption was, in reality, a reflection of the state of the investment market in the UK.
Some 43% of the company’s issued share capital was taken up in this redemption, Schuch explained, but since the redemption the trust has increased net assets by 20% and beat its index.
This builds on “excellent” long-term performance, with the trust having delivered an annualised NAV return of 9.3% since launch in October 2018.
“It was therefore disappointing for both the board and the manager that this did not seem to have been recognised by some investors,” after a poor first half of 2025, Schuch said.
The long-term outlook remains favourable
Nevertheless, looking ahead to the second half of 2026, both Von Hardenberg and Schuch remained broadly optimistic.
Von Hardenberg remained confident on the long-term potential of many of the team’s investments, although he conceded that geopolitics and monetary policy changes could lead to further near-term volatility.
“Short-term market developments are closely monitored, but they do not drive our investment decisions unless they materially alter our assessment of a company’s long-term fundamentals or intrinsic value,” he said.
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Chair Schuch added: “Many emerging economies enter this period with supportive fundamentals, including comparatively attractive valuations, resilient external balances, more flexible currencies and, in a number of countries, scope for monetary policy to become more supportive as inflation moderates.
“I believe the long-term outlook for emerging markets remains favourable.”
