Mobius Capital Partners LLP has targeted $1 billion assets under management for its first fund, to be launched in June and domiciled in Luxembourg. Star emerging markets money manager Mark Mobius unveiled his new venture alongside founding partners and ex-Franklin Templeton duo Carlos Hardenberg and Greg Konieczny at an event in London on Wednesday morning.
The trio, who have worked together for more than 20 years on remits including Templeton Emerging Markets (TEM), are busy building their team, which will consist of nine portfolio managers. The firm will outsource all administration tasks to UBS.
The company’s maiden fund, run with an ESG tilt, will be launched as a Luxembourg-based SICAV open-ended offering for both retail and institutional investors. Mobius says the plan is to a launch UK-based vehicle in time, too.
While the fund has not yet been registered and details will be announced alongside the launch, Mobius confirmed there would be a performance component to the fee. “The fee will certainly not be in line with ETFs,” Mobius said. “The fee structures of these funds runs anywhere between 60 basis points to 150 basis points, so that gives you some idea of what we’re talking about.”
Seed money for the fund will come from the founding partners and family members, but Mobius and Hardenberg outlined an ambitious target on AUM in time. “The target has to be about a billion because that’s a viable size for the kind of thing we’re talking about,” Mobius said.
Hardenberg added: “It’s very difficult to forecast how long it will take to reach $1 billion; it depends on so many different factors. We think that it could be achieved within two or three years, but we will have to be patient about how quickly this money will come in.”
Hardenberg adds this is a perfect time to launch an emerging market fund, explaining “emerging markets overall, especially compared to the US and European markets which look fairly inflated, remain fairly attractively valued”.
“There’s still a discount of around 20-25% to developed markets; and they’re not over-owned. Big institutions still haven’t gone back to the big positioning to emerging markets as they have in the past,” he continues.
Focusing on Governance
The trio have been investing in emerging markets for decades, with Konieczny responsible for eastern European mandates.
As a result, improving companies’ governance is something they have been actively engaged in. That led them to “go back to our roots” and establish a company that focuses on governance issues. “The numbers now indicate that good ESG marks mean better performance, but in order to get the E and S you need to get the G [right],” explains Mobius.
It’s a term that Hardenberg says is “often abused” by asset managers. While the idea is gaining in popularity, many funds just pick the highest-rated stocks in a list given to them by a data provider to invest in. “This is not what I call active investing in ESG-oriented companies,” he claims.
With growing populations, rising unemployment and growing social issues abounding in many emerging market countries, sustainability is becoming a huge political issue, Hardenberg notes. “We looked at the overall situation and said ‘how can we make a measurable impact?’; how can we as an investors play a more sincere role in this situation? The route to that reality is by engaging in governance with these companies.”
Taking this route will not guarantee a portfolio with stocks rated highly for ESG scores. In fact, says Hardenberg, “these could be companies which are actually in trouble…. in terms of their governance and transparency”.
He adds that, ideally, the fund will ideally have “no commonality with the index” and that Mobius Partners will take large stakes in each company in order to have more of an impact. That said, he reckons, with Mobius’s name behind them, they’ll be able to influence boards with stakes of 1% or less in some cases.
