Monday, August 17, 2009

Mobius on Emergings (EMF) (MSF) (Temit)

Originally I was looking for a way to get a stake in China. This was many years ago. Templeton’s China fund (TCH) was trading on the NYSE at that time.

It was clear that Mark Mobius was the man to watch for investing in China. I read all of his books and started to monitor his interviews on the web, like the one linked below from the BBC.

Because of his success, when John Templeton sold out to Ben Franklin, they used Mark Mobius more to attract new money, constantly all over the world, instead of his expertise in fund management. Our loss, but still the best we can do.

The motive of a mutual fund company is to make profits for the mutual fund, by pulling in new suckers. Whereas the closed-end funds at least in appearances is to mak
e profits for the shareholders.

The China fund was small at that time. 30 maybe 50 million. Mobius had a regional fund called the “Dragon (TDF).” The dragon was huge, $250 million and not a China pure play, like the smaller portfolio.

Mobius created a listed Vietnam Fund in the 1980s, but once the money was raised he could not find any public companies to invest in. So they merged it with the smaller China fund and went open-end with it so that Vietnam Fund investors could get out without a discount.

The main idea Mobius pleads with us about is to give him the freedom to buy anything, anywhere that comes up.

Mobius is sitting in this interview explaining that if a person does not have a lot of time, they should be in a diversified global emerging markets fund. And the interviewer wants him to name specific companies.

Mark is explaining why you want to be spread out in all of the rapidly expanding economies, and the guy wants to know about specific countries. Mobius explains about the new frontier countries and how they are already in the broarder funds.

Mobius clearly states that the boarder funds have advantages over specialized funds. Diversified emerging market portfolio’s traded on an exchange have a long-term advantage, alm
ost against anything else, in terms of profit potential and relative safety.

Sure we know that China is going to pop. But China will not blast off, on top in every year that we hold it. Emerging Market funds (Emf), and (Msf), can also hold positions in markets that will reign in the in-between years. Diversification spreads the risk of the fund being down when you need it.

I believe the word Mark used in his books and tapes was “special situations.” When something is about to happen, he jumps in there with a pile of money, takes a position, to make sure that it happens.

Then he goes back and splits the shares up among the funds that do not restrict ownership. It’s like censorship, don’t like it now, never will. Freedom of speech, freedom to spread wealth around.

The best ones go to Franklins private clients portfolios that cost millions to get in. I have seen these really blast off. They let people in those that have the power to put public funds, other people’s money, under Franklin’s management.

Closed-end funds were for the wealthy families before indexes came on the scene. They do not waste money on advertising or web sites. They do not accept new investors. The only way in, is to have your broker buy shares from shareholders getting out. You may get these at 10 to 20% below the asset value of your shares.

Imagine your ownership is spread across the fastest growing companies, in the fastest growing stock markets, in the fastest growing countries.

Good Karma really goes here, helping what use to be called the third world.

Mobius’s Emerging portfolio has Brazil with a larger position than China. India, Africa, Mexico, and Russia are all close behind. You need them all!

Government spending and increased confidence caused the first upward wave in share prices in 2009.

Wealth is shifting from the developed countries to the emerging and frontier economies, as it always has. How can it go the other way?

The rise will be orderly with dips of 20% below peaks expected in the uptrend.

This heads-up email gives you, and aware investors, plenty of time to “learn and be ready,” to shift a portion of current investments into, global worldwide diversified, emerging market index’s, or closed-end funds, whenever the market dips.

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