Hardenberg, who leaves Franklin Templeton at the end of March, resigned from his role as lead manager two weeks ago, with Sehgal stepping up from deputy portfolio manager to the lead position. Hardenberg’s departure was seen as a blow for the £2.1bn trust, after he led a turnaround in performance since assuming control from Mark Mobius in October 2015.
Speaking for the first time since being named lead, Sehgal said he believes “we are still in the early innings of the emerging-market earnings growth upturn and that valuations and sentiment continue to be conducive to further gains in emerging markets”.
In this environment, Sehgal said one of the main themes he is currently looking is IT and how it is reshaping the global economy.
“One interesting area is e-commerce, which we view as a penetration growth story, as consumers increasingly use multiple devices for online shopping,” he said. “We favour leading e-retailers as we believe they can gain dominant market share.
“Traditional ways of doing business are losing ground to the digital revolution, which has introduced innovative ways to improve a shopper’s experience. One way is to employ big data to enhance personalised recommendations for better click-through rates and monetisation. Another innovation is integrating online and offline retail models to fully capture consumer data and improve sell-through rates.”
At the end of December, Temit had 31% of its portfolio invested in IT, making it the fund’s largest sector weighting. Samsung Electronics was the fund’s largest individual holding, at 8.1% of assets.
Sehgal said he expected the global economic environment to remain favourable, driven by pro-business policies, increased investment, high liquidity and emerging market growth.
“The International Monetary Fund raised its global GDP forecasts for 2018 and 2019 from 3.7% to 3.9% in part due to the improving growth in the US economy and continued solid expansion in China,” Sehgal said.
“Earnings growth, fund inflows and a rebound in commodity prices also bode well for some emerging markets.”
In terms of the risks to be watching out for, Sehgal said uncertainty about the US administration’s policies, as well as the ability of China to continue its growth while making structural adjustments, are things to be aware of.
“US monetary policy shifts also remain a source of apprehension for many market participants,” he added. “There may be volatility ahead, but many emerging markets have stronger reserve positions and lower external debt today than historically, which makes them less vulnerable to external shocks.
“Moreover, emerging countries each have their own idiosyncratic domestic drivers and hence are less correlated to one another and the global market as a whole.”
