Investment Companies News

Franklin Templeton has opened its Luxembourg-registered Templeton Emerging Markets Smaller Companies fund to UK investors with a sterling-denominated share class.

The fund is managed by emerging markets veteran Mark Mobius, who heads the Templeton Emerging Markets team. The team currently has around £4bn invested in emerging market smaller companies. These are companies that have a market cap of $1bn or less and derive significant revenue or profits from emerging market countries. The universe is currently around 17,000 stocks.

Templeton believes that the asset class is unexplored by many investors, leading to pricing anomalies. The team focuses on under-valued companies with the potential to grow over the long-term. It believes there are significant opportunities, including those in ‘frontier’ markets like Vietnam, Kazakhstan and the Ukraine.

Mobius says: 'We have been investing in emerging market smaller companies as part of our other emerging market portfolios for many years. However, a dedicated emerging market small-cap fund offers investors new and exciting opportunities to gain more concentrated exposure to this asset class … We are seeing tremendous possibilities to invest in small-cap companies at some very attractive prices in all emerging market regions.

'Many of those emerging markets have robust GDP growth, trade surpluses, high foreign reserves, low inflation, strong investment and domestic demand – an environment where well-run small cap companies can flourish.'

The £493m Templeton Emerging Markets investment trust also run by Mobius has had a strong year, rising from 312.5p at the start of the year to its current price of 425p.