Stifel this week stated it was downgrading the Templeton Emerging Markets investment trust (Temit) due to concerns a recent manager appointment had been made with the view that current lead manager Chetan Sehgal should eventually take a backseat role.
In July, Franklin Templeton announced it had nabbed Andrew Ness from Martin Currie to act as the UK-based portfolio manager on the investment trust.
But Stifel said it was surprised by the move. Templeton has a large emerging market investment team and has historically promoted from within, said analysts Anthony Stern and Iain Scouller.
Sehgal is already manager or co-manager of a number of emerging market and small cap strategies. “Given the latest change and with the weak investment performance since Carlos Hardenberg’s departure, we are downgrading our rating to neutral as we wait to see how the story unfolds,” the Stifel analysts said.
Hardenberg is now a partner in emerging markets boutique Mobius Capital Partners, alongside Mobius (pictured) and another Franklin Templeton colleague Greg Konieczny. Mobius had retired from Franklin Templeton in January.
In response to the Stifel analyst note, a Franklin Templeton spokesperson said Ness would work closely alongside Sehgal, who continues as lead portfolio manager. The spokesperson pointed Portfolio Adviser back to the statement when questioned about whether Sehgal would be taking a backseat.
They added: “Over the course of the next couple of years, we plan to continue to expand and strengthen the investment talent of the team, in order to ensure proper resourcing for both investment activities as well as client engagements.”
Stifel said it prefers JP Morgan Emerging Markets to Temit, stating it has had the same manager for 20 years. It added it has the strongest track record across all emerging markets investment trusts over one, three and five-year track records and is currently trading at a 12% discount. It has previously described Austin Forey as the last remaining “pioneer” within emerging markets investment trusts, having founded and led the portfolio for 24 years.
