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Mobius's successor at Templeton brings China-Brazil expertise

Friday, April 1, 2016 - 06:36

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The man taking over from investment icon Mark Mobius at the Templeton Emerging Markets Group is a money manager who has lived and worked in China and Brazil, two of the most important economies for his portfolios.

[NEW YORK] The man taking over from investment icon Mark Mobius at the Templeton Emerging Markets Group is a money manager who has lived and worked in China and Brazil, two of the most important economies for his portfolios.

Stephen Dover, 54, becomes head of the group as Mr Mobius, the pioneering investor who popularised trading in emerging markets, steps down from day-to-day management. Mr Mobius, known for a research-intensive style that has him crisscrossing continents more than 250 days a year, remains chairman. The 79-year-old will focus on publicising the prospects for developing nations and attracting investors back to the asset class, where opportunities are rising again after years of declines, he said Thursday.

"I feel it's going to be a great opportunity," Mr Mobius said in an interview with Bloomberg Television's Yvonne Man and Rishaad Salamat. "My priority is to push emerging markets forcefully to make sure that people will get back in because they are out and underweight in emerging markets."

Mr Dover brings almost two decades of experience with Franklin Resources affiliates and an international background to his new job as chief investment officer of Templeton Emerging Markets Group, a title he assumes April 15 in addition to his current role as investment chief of Franklin Local Asset Management. He has lived and worked in China, Costa Rica, England and Brazil, according to a company biography. 

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The California resident co-manages at least seven international funds with US$3.7 billion in assets, according to data compiled by Bloomberg. The largest, the US$2.7 billion Franklin Templeton India Fund based in Luxembourg, has taken a roller-coaster ride, falling 5.5 per cent in 2015 after soaring 41 per cent a year earlier. It's down 2.2 per cent this year.

Mr Dover, who is on vacation and deferred questions to a company spokeswoman, said in a January 2016 investment outlook that volatility "will continue to be a driving force in the markets of 2016." Companies with low leverage, stable cash flows, strong brands and growing markets "are likely to outperform some of their less stable peers" in an environment of rising US rates and global uncertainty, he said.

At Franklin Templeton, he has has managed investment groups from Australia to Japan and Brazil. He also was a portfolio manager and principal at Newell Associates and has worked for Towers Perrin Consulting in New York, London and San Francisco.

"What sets Stephen apart is his substantial expertise in emerging markets where it is critical to have a deep understanding of different cultures and what drivers are important locally in each market," Purav Jhaveri, a managing director who has worked with Mr Dover for 15 years at Franklin Templeton, said in an e-mail.

Mr Mobius, who has been investing in emerging markets for about four decades, developed a reputation for sniffing out stocks that were undervalued relative to their growth potential and built on that by consistently delivering outsized returns earlier in his career. He struggled in recent years as poorly timed investments in commodity and mining companies led to losses.

Mr Mobius announced in July that he will retire as the lead manager of the Templeton Emerging Markets Investment Trust, one of the oldest developing-nation stock funds, and Carlos Hardenberg was selected to take over from him in October.

Many emerging-market fund managers have floundered as China's expansion slows and former standouts such as Brazil and Russia posted disappointing growth amid a rout in commodities. Mr Mobius' flagship US$4.4 billion Templeton Asian Growth Fund lost 27 per cent in 2015, trailing an 8.9 per cent drop in the benchmark and underperforming 99 per cent of peers, data compiled by Bloomberg show.

Emerging markets are at a turning point and a reversal is in sight, Mr Mobius told Bloomberg this month, signaling optimism after the worst annual rout in four years. Brazil, Russia and Vietnam are among his top picks, he said on Thursday.

The MSCI Emerging Markets Index has rallied 21 per cent from a seven-year low in January, while a gauge of developing-nation currencies rebounded 9 per cent. Demand for riskier assets is rising as oil's rebound from a 13-year low and cheaper valuations are outweighing concerns about China's economic slowdown and the end of near-zero interest rates in the US.

"I would say emerging market assets will be an important class for higher potential growth in the coming years," said Bernard Aw, a strategist at IG Asia Pte in Singapore. "I can't say beyond 5-10 years, as some emerging countries could leave the group after becoming developed decades later. This would change the dynamics."

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