The narrow highway was barely wide enough for two cars. "It
was pretty frightening. You never knew if these trucks would be able to make it
or turn over," Mark Mobius said, describing a harrowing trip to scout investment opportunities in Southern Russia. With heavy trucks barreling in his
direction, often the only remedy available was – like a game of chicken – the
To Mobius, executive chairman of Templeton Emerging Markets Group,
navigating high-risk situations isn't unusual. For more than two decades,
Mobius' name has been synonymous with emerging market investing. His returns, as exemplified by funds like Templeton Developing Markets Trust (TEDMX), frequently outpace the fund's competitors'. Since 1991, for example, TEDMX has grown 366.15 percent.
he oversees more than $50 billion in assets. When people talk about emerging
market investing, often they can because Mobius helped connect the dots.
"I think that's something I hope people will remember me for
is the fact that we really opened people's eyes to the opportunities in these
countries," he said in an interview with SmartPlanet.
With a reputation for a Yul Brynner aesthetic and bespoke
suits, Mobius has been scouring the world for more than two decades, amassing a
collection of frequent flier miles that could make former Secretary of State
Hillary Clinton jealous.
To Mobius, international investment was the destination,
rather than the beginning of a career marked by wide-ranging curiosity. "I
almost became a professional student," Mobius said. Before his 30th
birthday, he completed a bachelor of arts degree and a master's degree in communication from Boston College
and earned a doctorate in economics from MIT. It was the world of business, Mobius finally
discovered, that could accommodate his curiosity.
"I realized at the time that my interests were so wide and
varied that I imagine this is the best for me because there are so many
different kinds of companies, different industries that you get to learn
about," Mobius said.
On a scholarship to study in Japan, Mobius became convinced
to pursue a career in Asia. "If I am going to do anything in my life," he told himself, "I am going to work abroad, particularly in Asia."
In the years that followed, Mobius delivered on that promise,
working first as a survey researcher in Japan, Korea and Thailand for
International Research Associates; a product researcher for Monsanto in Hong
Kong; an independent consultant in Hong Kong; and later a securities analyst at
Vickers de Costa in Taiwan. In the midst of this, Mobius co-authored Trading with China with Gerhard F.
Published in 1973, the book proved emblematic of both optimism
and pessimism. "When I wrote that book I made a projection of what trade with
China would be. At the time, most of the people said your projection is way,
way too optimistic," he recalled.
The current emergence of China, however, allows for another reading
of Trading with China, Mobius
"Looking back now, that projection was way, way too
pessimistic because all the very bright projections that I made – which looked
bright and over the top at that time – now look terribly inaccurate and
underestimated what really happened," he said.
It was in Hong Kong that Mobius met Sir John Templeton, the Tennessee-born
pioneer of the Templeton Growth Fund. In 1987, Templeton, described by Money magazine as "arguably the greatest
stock picker of the century," asked Mobius to manage Templeton’s new $100
million emerging markets fund. Shortly thereafter, Mobius pitched his secure
job for the opportunity.
To Templeton, Mobius brought knowledge of Asia. Templeton, despite
his knighthood, impressed Mobius with his humility. "You know," Mobius recalled Templeton telling him once, "anyone who thinks he knows the answers probably
doesn’t know the questions."
Comradeship with Templeton left an impression. "I realized that in our business, you’ve got to keep a really open mind," he said. "Things
are changing every day."
Have Fund, Will
The world was a lot smaller when Mobius took the helm of
Templeton Emerging Markets fund in 1987, at least from an investment point of
Cuervo-Cazurra, the Robert Morrison Fellow and associate professor of
international business and strategy at Northeastern University, said global
markets in the late-'80s had limited options. "Most of what we call the emerging markets were run under the communist economic system," he said, "so
they were basically not open for any kind of private investment and were not
open to private enterprise."
As the Cold War came to a close, protectionist economics
gave way to market liberalization in one country after another. By the mid-'90s,
major economies like Brazil, India, Korea, Mexico and Taiwan were suddenly
open for business. In the pre-Internet world, however, the most efficient way
to seize these opportunities was to get on an airplane.
While recent research has taken Mobius to Dubai, he's not
averse to traveling to precarious places when researching investments.
"You can have a pretty chaotic situation in a country but
the companies can be doing quite well," said Mobius, whose investments as of
Aug. 31, 2013, were concentrated in China, Brazil and Thailand, among other countries.
Thailand, for example, remains an interesting investment opportunity in spite of recent political instability, Mobius writes in a Feb. 21 blog post. "The situation in Thailand certainly is testing the nerves of investors, but we would argue that a number of countervailing factors favor long-term investment prospects there."
More important than a poor macro-economic or macro-political
situation, Mobius said, is how a company responds to change. "The degree to
which they are able to [negotiate those challenges] is really an indication of
their ability to operate profitably and effectively," he said. "A bad macro-economic or
macro-political situation can sometimes be good for these companies."
Mobius underscores this point in his 2012 book Passport to Profits. "If you want to
find the companies of the future, look for people who can handle the future," he writes.
This open mind, coupled with the Templeton group's famous
focus on fundamental analysis, has lead to contrarian investment ideas. In late
2013, for example, Mobius told CNBC he was potentially interested in investing
in Greece. Though some news reports argue that the Mediterranean nation has
turned a corner, others
have recently called it a "failed state."
More recently, as investors move away from emerging markets,
Mobius remains confident in the long-term value of emerging market investing.
In a Jan.
30 blog post he explained, saying:
"The bottom line for emerging markets, as I see it, is that
the long-term investment case hasn't dramatically changed. And I don't see it
changing as long as these three themes remain in place: emerging markets' economic growth rates in general continue to be at least three times faster
than those of developed markets; emerging markets have much greater foreign
reserves than developed markets; and the debt-to-GDP ratios of emerging market
countries generally remain much lower than those of developed markets."
Though Mobius' TEDMX was down 1.26 percent in the last year, returns over the last decade were
135.15 percent. An investment of $10,000 in 2004 would be worth $23,515 today,
On the Move
Ever the student, the 77-year-old Mobius often travels with
a non-fiction book nearby, learning lessons of history as he goes. Through this,
he maintains a sense of hope about the current moment.
"I'd say I'm more optimistic than I've ever been because we
are probably in the most incredible period of mankind’s history," Mobius said.
“The gains of technology are accelerating ... The gains in productivity are
accelerating. Knowledge, not just in science but in human behavior, is
accelerating. This is all going to be very positive for the existence of
mankind. I see that as I travel around, particularly in these frontier markets.
They’re having the advantage of leapfrogging all of the old technology and
going into the latest technology.”
That point might help explain why Mobius maintains a
hectic travel schedule.
"It's this fascination for new things," he said, explaining
what keeps him in the game. "We're learning every day, without fail. We’re
learning something new on a daily basis. It's so exciting."
As it turns out, he may have become a professional student after all.
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This post was originally published on Smartplanet.com