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Templeton Emerging Markets Investment Trust
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== Summary<ref name=":2">Source: Edison Investment Research.</ref> == '''Templeton Emerging Markets Investment Trust (TEMIT) is a very large and well-established fund run by experienced managers, Chetan Sehgal (lead manager) and Andrew Ness. Despite a tough period of performance since Q221 due to macroeconomic developments, the managers are sticking to their long-term strategy of investing in companies with sustainable earnings power that are trading at a discount to their estimated intrinsic values. Sehgal and Ness remain positive on the prospects for emerging markets, which are home to a range of ‘best-in-breed’ companies including semiconductor manufacturers and low-cost commodity producers. The managers are further diversifying the portfolio in response to the new realities of rising interest rates, China’s zero-COVID policy, the war in Ukraine and climate change.''' === The analyst’s view === While emerging markets can be volatile, investors may benefit from an allocation to the regions given their above-average growth prospects and relatively attractive valuations compared with developed markets. As part of the wide resources of the Franklin Templeton Emerging Markets Equity (FTEME) team, the managers are able to identify interesting investment opportunities that may be overlooked by other investors, including TEMIT’s large overweight positions in LG Corporation, MediaTek and Guangzhou Tinci Materials Technology. While TEMIT can now hold up to 10% of the fund in unlisted companies, the managers are finding more value in the public rather than private markets. The trust offers a portfolio of emerging market names that is diversified by sector, geography and market cap. TEMIT’s portfolio is actively managed and does not have a directional bias, meaning it has the potential to outperform in both rising and falling stock markets. === Scope for a higher valuation === TEMIT’s shares are trading at a 12.9% discount to cum income NAV, which is wider than the 10.6% to 11.1% range of average discounts over the last one, three, five and 10 years. This may be due to the trust’s relative underperformance since Q221; hence any improvement in TEMIT’s results could result in a narrower discount.
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