Templeton Emerging Markets IT - bad, good...bad?

aroominyork

Glen_Clark wrote: »

About 3 years ago I was looking to invest in EM. I usually just choose trusts on discount and JP Morgan EM had the most discount. Templeton had less, but a better long term record and was sort of recommended on here. So I put half in each. Templeton is up 38% and JP Morgan up 62%, both plus dividends. So I think I will go back to choosing them on the discount.

That's a very different view from your posts #3 & #11 on this thread https://forums.moneysavingexpert.com/discussion/5733458

Glen_Clark

aroominyork wrote: »

That's a very different view from your posts #3 & #11 on this thread https://forums.moneysavingexpert.com/discussion/5733458

No it isn't.
Overpaid / incompetent / unlucky management is acceptable to me when its priced in by the discount to NAV. They might improve - or be forced out like at Alliance Trust which has made me a 75% paper gain plus dividends in 4 years.

ArchBair

I hold Baillie Gifford Leading Companies in my ISA but the wife has split her EM exposure with 2 IT's (like Glen Clark). However, instead of Templeton EM she preferred Blackrock Frontiers to go with JP Morgan EM.

aroominyork

Glen_Clark wrote: »

No it isn't.
Overpaid / incompetent / unlucky management is acceptable to me when its priced in by the discount to NAV. They might improve - or be forced out like at Alliance Trust which has made me a 75% paper gain plus dividends in 4 years.

I’m not sure if I’m rising to bait here but:

- I’ve never seen someone who’s incompetent improve – in any walk to life – to the point where I’d want them doing the equivalent of investing my money
- Your previous post said, when discussing TEM, that bad trusts that trade at a discount should be wound up to enable shareholders to realise the full value of their assets but keep going out of their own self-interest to keep management in cushy jobs.

I couldn’t see anything more diametrically opposed to wanting to buy whichever IT is trading at the largest discount.

Thrugelmir

Utilico Emerging Markets is another alternative you could consider. If diversification is your aim.

https://www.uem.limited/

Glen_Clark

aroominyork wrote: »

I couldn’t see anything more diametrically opposed to wanting to buy whichever IT is trading at the largest discount.

Then you are missing the fundamental point that, (if the discount is big enough), the management are a liability that is priced into the shares.

Glen_Clark

aroominyork wrote: »

- I!!!8217;ve never seen someone who!!!8217;s incompetent improve !!!8211; in any walk to life !!!8211; to the point where I!!!8217;d want them doing the equivalent of investing my money

Maybe not, but they will eventually move on one way or another. In the case of Alliance Trust, Elliots forced out the overpaid underperforming management to unlock some value in the Trust, and narrowing the discount, which turned out well for me.
Wheras if you buy a Trust with a perceived fantastic manager like Woodford, it was trading at a premium. Then when his luck runs out, or he moves on, it goes to a discount - thats where the investor loses most.

aroominyork

Glen_Clark wrote: »

Then you are missing the fundamental point that, (if the discount is big enough), the management are a liability that is priced into the shares.

And the management continue to underperform, the NAV falls further behind its peers, the discount gets larger as investors increasingly realise its a fund to avoid and eventually you take your loss and get out. Unless, of course, better managers are brought in, but pinning your hopes on that is more like gambling than investing.

Glen_Clark

aroominyork wrote: »

And the management continue to underperform, the NAV falls further behind its peers, the discount gets larger as investors increasingly realise its a fund to avoid and eventually you take your loss and get out. Unless, of course, better managers are brought in, but pinning your hopes on that is more like gambling than investing.

Thats a risk. But if the discount falls much further the shareholders might wake up and give the management a shake - like Elliot did to Alliance Trust. Wheras if you are starting from a higher level (premium) I see the risk as bigger because its got further to fall.

aroominyork

Glen_Clark wrote: »

Thats a risk. But if the discount falls much further the shareholders might wake up and give the management a shake - like Elliot did to Alliance Trust. Wheras if you are starting from a higher level (premium) I see the risk as bigger because its got further to fall.

Over time NAV is much more important than discount//premium. The latter might influence my timing for buying or selling a particular IT but not the question of whether to buy or sell it. I don't know the Alliance Trust story but one slice of good judgement or fortune doesn't define a strategy; more likely, it's the exception that proves the rule.