Mobius Investment Trust: Index-beating returns since launch

MMIT’s highly active, differentiated approach has led to lower correlation and index-beating returns since launch…by Josef Licsauer

Overview

Managed by Mobius Capital Partners (MCP) Emerging Markets and led by founder Carlos von Hardenberg, Mobius Investment Trust (MMIT) provides access to emerging and frontier markets, focussing predominately on small- and mid-cap companies that often escape mainstream investor attention. Since its 2018 launch, Carlos has championed this segment, citing limited research coverage has created inefficiencies and rich hunting grounds for high-alpha opportunities.

The team takes a private-equity-style approach to public equities, conducting deep, on-the-ground research and leveraging a two-decade founder network. They prioritise high-quality companies with strong balance sheets, sustainable profit growth, high margins, and lasting competitive advantages, whether through high barriers to entry or innovative business models (see Portfolio). Governance is also central, with MMIT integrating its proprietary ESG+C framework to assess sustainability, corporate culture, and shareholder alignment, helping mitigate risks and uncovering opportunities.

MMIT’s core convictions lie in India, supported by its youthful, well-educated population driving long-term growth, as well as in Taiwan and South Korea, leaders in tech and innovation. Exposure to China remains selective, focussing on companies exhibiting Western-style corporate structures and dominant market positions to mitigate risks like regulation, property instability, and deflationary pressures.

Since inception, MMIT has outperformed the MSCI EM Mid Cap and broader MSCI Emerging Markets Index, with strong stock selection and meaningful exposure to India and high-growth tech driving performance. However, a dip in Indian mid-caps, the ripple effect from the US tech sell-off, and its China underweight have weighed heavily on Performance so far this year.

Currently trading at a 5.8% Discount, wider than its five-year average of 4.8%, MMIT offers a potentially attractive entry point, providing differentiated emerging markets exposure or serving well as a complement to developed market-heavy portfolios.

Analyst’s View

 
Short-term volatility in emerging markets appears inevitable, with Trump’s tariff plan, geopolitical tensions, and China’s economic challenges clouding the outlook and weighing on sentiment. However, we think this could be an opportune time to add exposure. Valuations are historically low, with emerging markets trading near record discounts to the US, whilst earnings growth across the sector—particularly in mid-caps—is forecasted to outpace the MSCI World in 2025 and 2026. With long-term structural trends seemingly intact, this should create fertile ground for active stock pickers.

Against this backdrop, MMIT stands out. Its differentiated approach has delivered strong relative returns since inception, offering genuinely uncorrelated emerging market exposure. By focussing on mid-caps, it taps into a broader, under-researched universe where market inefficiencies create meaningful alpha opportunities. Additionally, the team’s private-equity-style approach, deep local networks, and proprietary ESG+C framework help them to identify high-quality, innovative companies that may have escaped mainstream attention. This focus has shaped a high-active-share portfolio with lower correlation to peers.

MMIT’s portfolio typically trades at a premium to the index, largely reflecting its quality bias—with Carlos prioritising financially robust, well-governed companies with little to no debt. This focus has resulted in MMIT’s Portfolio showing higher returns on equity, stronger historical earnings growth and higher margins than the index. Crucially, its active, high-conviction approach is well suited to a closed-ended structure, which allows the team to take long-term positions without the liquidity constraints that open-ended funds often face.

Overall, we think MMIT is an attractive long-term holding, offering differentiated emerging exposure and access to lesser-known parts of the market, with its active, high-conviction, benchmark-agnostic approach presenting a compelling case. However, it’s worth bearing in mind that its highly active strategy means it will go in and out of favour at times, with performance likely influenced by its tech and India overweight, alongside its China underweight.

Bull

• Exposure to under-researched small- and mid-cap companies within some of the world’s fastest-growing economies
• Private-equity-style approach to public equities and on-the-ground research provides an edge in stock selection
• Emerging market valuations look attractive versus developed markets

Bear

• Greater exposure to small- and mid-caps may pose as a headwind when large-caps outperform
• A highly active approach can lead to underperformance when positions don’t work
• Small trust size means that fixed charges are relatively high

See the full research on MMIT here >

 

Disclaimer

Disclosure – Independent Investment Research
 
This is independent research issued by Kepler Partners LLP. The analyst who has prepared this research is not aware of Kepler Partners LLP having a relationship with the company covered in this research report and/or a conflict of interest which is likely to impair the objectivity of the research and this report should accordingly be viewed as independent.