Mobius Investment Trust invests in emerging markets smaller companies via an ESG approach
Its managers also look at a company's culture because they have found that successful companies tend to treat their employees well
The potential for ESG improvements varies in different countries
Emerging markets are not associated with good governance, transparency or ethical behaviour. But Mobius Investment Trust (MMIT) invests in emerging markets taking into consideration environmental, social and governance (ESG) factors. And its managers – Carlos Hardenberg and veteran emerging markets investor Mark Mobius - have been considering such issues since long before they rose to prominence in any region.
“We have invested in emerging markets for many decades [where] the companies are often run by phenomenal entrepreneurs,” says Hardenberg. “They really know how to run the businesses - they are very good operators. But in many cases they neglect governance, transparency and other aspects which are important for shareholders. We started to work on governance improvements around 15 years ago in Brazil, Korea, Turkey and other markets. We started to always review, for example, the composition and quality of boards. If you have a proper supervisory board which is independent, has very clear key performance indicators and follows clear policies there’s always an insurance policy. We have appointed over 80 board members in emerging markets and created a better relationship between shareholders and portfolio companies. It created confidence and trust in these businesses, and when companies start to play by the rules, become more transparent, and have better policies and governance rules in place, they typically start to outperform.”