Trust of trusts champions Mobius in recent spate of IPOs

Smithson and Merian fail to make the grade in the BMO Managed Portfolio

The Mobius Investment Trust has beaten out Fundsmith and Merian Global Investors to nab capital from the BMO Managed Portfolio Trust in the recent spate of high-profile investment trust initial public offerings.

The Mobius Investment Trust fell short of expectations when it raised £100m at launch rather than the £200m targeted. However, Hewitt (pictured) reveals he added 5% within the £71.3m growth portfolio of his trust of investment trusts, which he runs concurrently with a £54.8m income portfolio held within the same trust structure.

A lot of Hewitt’s rationale came down to current market conditions.

“Emerging markets have been under the cosh, they’ve not done well, so as a time to invest it’s quite good,” he said at an Association of Investment Companies presentation in Edinburgh during November. He appreciated Mark Mobius’s team had put their own money into the trust and that it would be their first vehicle. “I think their chances of success are quite good.”

He also spoke highly of Carlos Hardenberg, who co-manages the trust with Mobius and Greg Konieczny. The trio defected from Franklin Templeton Investments to become founding partners of the boutique emerging markets firm.

Smithson and Merian don’t make the grade

However, the Managed Portfolio Trust was not among the investors piling into the Smithson Investment Trust, which became the largest UK-domiciled investment trust launch when it raised £822m.

Hewitt said it holds some highly-valued companies, which could be adversely affected in a downturn, although he’d be willing to look at it in future at the right price. “Whilst the performance of the Smithson open-ended fund has been outstanding, I decided not to invest due to the macro outlook I have, particularly for the US and UK equity markets over the next six months to a year.”

Merian Chrysalis also failed to nab IPO capital from Hewitt due to concerns he had over the concentration of unlisted holdings.

Like Smithson, he said it could be attractive at the right price and in the right market cycle. Its premium of 5.1% is currently higher than the 3.3% premium on the Smith Investment Trust, while the Mobius Investment Trust trades at a 5.5% discount.

Merian Chrysalis also raised just £100m from its November IPO despite targeting twice that amount with some speculating Terry Smith’s vehicle had stolen the rival trust’s thunder with his fund house’s record raise.

Temit remains in the portfolio

The Managed Portfolio Trust still holds the Templeton Emerging Markets Investment Trust where Mobius made his name as an emerging markets investor. “It’s a smaller weighting and I’m watching it, but it’s a company with a lot of resource.”

It has been a long-term holding but Hewitt admits he sold the position for a period following some underperformance.

The promotion of Hardenberg prompted him to return as a shareholder. “He changed the portfolio quite substantially and as a result Templeton Emerging Markets started performing strongly.”

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