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  • Why Emerging Markets Now?

    In contrast to previous years, when MEMF delivered strong returns driven by small- and mid-cap emerging market companies despite broader EM equities lagging, the asset class entered a recovery phase in 2025. Emerging markets demonstrated to global investors that they can deliver strong returns in a market previously dominated by American exceptionalism.

    However, the benefits were largely captured by a small number of mega-cap stocks, resulting in unusually narrow market leadership. While gains have been highly concentrated so far, a broader set of supportive dynamics for emerging markets should increasingly extend beyond the largest stocks and benefit quality small- and mid-cap companies.

    At the same time, many of our holdings have continued to execute well operationally, but this has not been fully reflected in share prices due to macroeconomic headwinds. As these pressures ease, we see scope for a catch-up in valuations, providing support to the portfolio in the years ahead.

    Emerging Markets Supported by Numerous Tailwinds

    At year end, emerging markets were trading at a 38% discount on a P/E basis and a 61% discount on a P/B basis relative to developed markets. These valuation gaps are particularly pronounced in the sectors we focus on, such as technology and consumer discretionary. Importantly, the attractive discounts noted above are also increasingly evident across quality stocks, extending beyond traditional value segments.

    Furthermore, emerging markets are supported by a 9.4% weakening of the US dollar in 2025, which is expected to continue into 2026. This typically benefits EM currencies, with the Brazilian real, Colombian peso and Taiwanese dollar among the strongest performers this year. EM bond spreads are also near some of their highest levels. Emerging markets continue to maintain healthier debt levels than developed markets (69% versus 109% of GDP in 2024), while simultaneously offering stronger GDP and earnings growth projections.

    Higher Growth in EMs Combined with Healthier Debt Levels

    Source: IMF WEO October 2025, Bloomberg. * indicates forecast.

    Political risk related to elections is currently cyclically low, with major electoral events in 2026 limited to Vietnam and Brazil across our key markets. However, geopolitical risks more broadly remain elevated. Recent developments, including tensions between the US and Europe over Greenland and events in Venezuela, have already added complications to the outlook for 2026, alongside long-standing risks such as the Russia–Ukraine conflict, instability in the Middle East, global trade wars, and ongoing tension between China and Taiwan. We remain highly mindful of geopolitical risks and always apply a macro risk overlay to our bottom-up stock selection.

    The Federal Reserve’s expected rate cuts this year further enhance the outlook, as lower US yields generally push investors toward higher-return emerging market assets—particularly as many EMs benefit from moderating inflation and higher real rates themselves. While effects may vary across countries, the global easing cycle provides a broadly supportive backdrop for EM performance.

    Furthermore, a number of country-specific tailwinds should support our portfolio exposures. Taiwan continues to benefit from a powerful semiconductor investment cycle and a globally competitive innovation ecosystem. South Korea is advancing structurally in high-end manufacturing, materials and automation, where we continue to find globally competitive businesses trading at attractive valuations.

    Taiwan and Korea Well Positioned in Semiconductor and AI Markets

    Source: Statista, Semiconductor Industry Association, Bloomberg, Economic
    Times, South Korea Ministry of Trade. * indicates forecast. Data as of 31 December 2025.

    Despite a challenging start to 2026, marked by foreign outflows amid reduced risk appetite and heightened macro volatility following recent geopolitical developments, India’s longer-term outlook remains compelling. We continue to look through near-term volatility, supported by resilient GDP growth, rising discretionary consumption and improving capital expenditure trends. The year 2026 could turn into another period of significant progress for the country.

    Brazil offers selective opportunities as inflation moderates, interest rates decline and corporate balance sheets strengthen. We remain cautious around the upcoming elections, which are likely to introduce additional volatility in 2026.

    While emerging markets have delivered strong headline returns this year, dispersion beneath the surface has been significant. With valuation spreads at elevated levels and earnings revisions diverging meaningfully by country, sector and company, passive exposure increasingly reflects index concentration rather than the breadth of opportunity available.

    In this environment, disciplined bottom-up stock selection is essential to identifying structurally stronger businesses beyond benchmark heavyweights. We believe the portfolio is well positioned should the recovery broaden into under-owned areas of the market where fundamentals remain intact.

    With a portfolio built around high-quality, lesser-known companies and a disciplined, active approach to capital allocation, we remain fully committed to our investment philosophy and to delivering long-term performance and shareholder value.

  • Why Emerging Markets Now?

    In contrast to previous years, when MMIT delivered strong returns driven by small- and mid-cap emerging market companies despite broader EM equities lagging, the asset class entered a recovery phase in 2025. Emerging markets demonstrated to global investors that they can deliver strong returns in a market previously dominated by American exceptionalism.

    However, the benefits were largely captured by a small number of mega-cap stocks, resulting in unusually narrow market leadership. While gains have been highly concentrated so far, a broader set of supportive dynamics for emerging markets should increasingly extend beyond the largest stocks and benefit quality small- and mid-cap companies.

    At the same time, many of our holdings have continued to execute well operationally, but this has not been fully reflected in share prices due to macroeconomic headwinds. As these pressures ease, we see scope for a catch-up in valuations, providing support to the portfolio in the years ahead.

    Emerging Markets Supported by Numerous Tailwinds

    Source: Bloomberg, Research Affiliates (RA) Asset Allocation Study. As of 31 December 2025.

    At year end, emerging markets were trading at a 38% discount on a P/E basis and a 61% discount on a P/B basis relative to developed markets. These valuation gaps are particularly pronounced in the sectors we focus on, such as technology and consumer discretionary. Importantly, the attractive discounts noted above are also increasingly evident across quality stocks, extending beyond traditional value segments.

    Furthermore, emerging markets are supported by a 9.4% weakening of the US dollar in 2025, which is expected to continue into 2026. This typically benefits EM currencies, with the Brazilian real, Colombian peso and Taiwanese dollar among the strongest performers this year. EM bond spreads are also near some of their highest levels. Emerging markets continue to maintain healthier debt levels than developed markets (69% versus 109% of GDP in 2024), while simultaneously offering stronger GDP and earnings growth projections.

    Higher Growth in EMs Combined with Healthier Debt Levels

    Source: IMF WEO October 2025, Bloomberg. * indicates forecast.

    Political risk related to elections is currently cyclically low, with major electoral events in 2026 limited to Vietnam and Brazil across our key markets. However, geopolitical risks more broadly remain elevated. Recent developments, including tensions between the US and Europe over Greenland and events in Venezuela, have already added complications to the outlook for 2026, alongside long-standing risks such as the Russia–Ukraine conflict, instability in the Middle East, global trade wars, and ongoing tension between China and Taiwan. We remain highly mindful of geopolitical risks and always apply a macro risk overlay to our bottom-up stock selection.

    The Federal Reserve’s expected rate cuts this year further enhance the outlook, as lower US yields generally push investors toward higher-return emerging market assets—particularly as many EMs benefit from moderating inflation and higher real rates themselves. While effects may vary across countries, the global easing cycle provides a broadly supportive backdrop for EM performance.

    Furthermore, a number of country-specific tailwinds should support our portfolio exposures. Taiwan continues to benefit from a powerful semiconductor investment cycle and a globally competitive innovation ecosystem. South Korea is advancing structurally in high-end manufacturing, materials and automation, where we continue to find globally competitive businesses trading at attractive valuations.

    Taiwan and Korea Well Positioned in Semiconductor and AI Markets

    Source: Statista, Semiconductor Industry Association, Bloomberg, Economic
    Times, South Korea Ministry of Trade. * indicates forecast. Data as of 31 December 2025.

    Despite a challenging start to 2026, marked by foreign outflows amid reduced risk appetite and heightened macro volatility following recent geopolitical developments, India’s longer-term outlook remains compelling. We continue to look through near-term volatility, supported by resilient GDP growth, rising discretionary consumption and improving capital expenditure trends. The year 2026 could turn into another period of significant progress for the country.

    Brazil offers selective opportunities as inflation moderates, interest rates decline and corporate balance sheets strengthen. We remain cautious around the upcoming elections, which are likely to introduce additional volatility in 2026.

    While emerging markets have delivered strong headline returns this year, dispersion beneath the surface has been significant. With valuation spreads at elevated levels and earnings revisions diverging meaningfully by country, sector and company, passive exposure increasingly reflects index concentration rather than the breadth of opportunity available.

    In this environment, disciplined bottom-up stock selection is essential to identifying structurally stronger businesses beyond benchmark heavyweights. We believe the portfolio is well positioned should the recovery broaden into under-owned areas of the market where fundamentals remain intact.

    With a portfolio built around high-quality, lesser-known companies and a disciplined, active approach to capital allocation, we remain fully committed to our investment philosophy and to delivering long-term performance and shareholder value.

  • MMIT Q4 Manager Commentary

    ”The best time to buy quality stocks is now”.

    Ruchir Sharma, Financial Times 01.12.2025

    Dear Fellow MMIT Shareholder,

    Since the inception of the strategy in 2018, our objective has remained unchanged: to deliver long-term performance by identifying high-quality, innovative, under-researched mid-cap compounders with strong fundamentals that are not represented in the benchmark. This disciplined investment philosophy has driven strong results over prior years, culminating in 35.2% outperformance against the MSCI EM Mid Cap Index in GBP terms by the end of 2024.

    However, 2025 played out differently, despite emerging markets finally ending a decade of underperformance versus developed markets. The year proved challenging in relative terms for the strategy, as the market environment was particularly difficult for quality-oriented mid-cap stocks. Returns were increasingly driven by a narrow group of large, liquid companies and by style dynamics that ran counter to our investment approach.

    That said, Q4 showed early signs of stabilisation and improvement. Over the quarter, MMIT’s net asset value returned 2.5%, while the MSCI EM Mid Cap Index (Net TR) delivered a return of 2.2% in GBP terms. This relative improvement was supported by solid operational performance across several portfolio holdings, with a number delivering results ahead of expectations.

    Emerging markets recorded steady gains over the quarter, finishing the year as the strongest-performing global equity asset class. As is often the case in the early stages of a recovery, initial inflows were concentrated in the largest and most liquid stocks. Within the MSCI EM Index, the top five holdings accounted for over 40% of total returns in 2025.

    Performance in EM Driven by a Few Large Companies

    Source: Bloomberg. As of 31 December 2025.

    Our investment universe is deliberately focused on lesser-known, under-researched small- and mid-cap companies across emerging markets, where we believe our bottom-up research adds the greatest value by looking beyond well-known benchmark constituents. The under-researched nature of this segment—typically marked by limited coverage, lower visibility and minimal benchmark overlap—can give rise to pricing inefficiencies that are largely absent in the highly efficient mega-cap space.

    Active management is more likely to add value in these less crowded areas of the market, where returns are driven more by company-specific fundamentals than by index flows. Against a backdrop of unusually narrow market leadership, we believe this positioning may offer meaningful potential for relative catch-up as fundamentals reassert themselves.

    During 2025, the strategy’s emphasis on quality encountered significant style headwinds, with quality stocks—especially within emerging markets—suffering one of their worst periods of relative underperformance compared with the broader benchmark. Smaller companies, particularly growth-oriented businesses in the technology sector, were disproportionately affected by continued macroeconomic and geopolitical uncertainty.

    Investor risk appetite remained constrained, with capital rotating towards perceived safe-haven assets such as gold and towards larger, more liquid equities viewed as more resilient in volatile markets.During this period, investors favoured sectors such as banks, commodities and defence-related industries, supported by higher interest rates, elevated fiscal and defence spending, and ongoing geopolitical tensions. This defence-led rotation provided relative support to parts of the industrials and commodities sectors.

    These areas, which are deliberately excluded from the portfolio due to their regulatory complexity, capital intensity and limited pricing power, were generally trading at lower valuation multiples and tended to be more resilient during periods of market correction.

    EM Quality Has Fallen Behind Value This Year

    Source: Bloomberg, MCP. Figures refer to past performance. Past performance is not a reliable indicator for future performance. As of 31 December 2025.

    Additionally, China was a major contributor to emerging market performance in 2025, accounting for approximately 25% of MSCI Emerging Markets Index gains while representing around 23.6% of the index. However, we believe the rally has been driven primarily by multiple expansion, improved sentiment and policy support rather than an improvement in underlying fundamentals such as earnings growth.

    Economic data remains weak, highlighting a disconnect between market performance and a meaningful recovery, and gains have been concentrated largely in the technology sector, where valuations have become less compelling. Structural risks also remain, including the potential for abrupt and unpredictable regulatory intervention, as experienced in 2021.

    Against this backdrop, we continue to approach the market with caution, while remaining open to selectively deploying capital where individual companies meet our quality, governance and valuation criteria, without compromising discipline in pursuit of exposure.

    Furthermore, performance was negatively impacted by our exposure to the software and IT services sector (19.3% in MMIT versus 1.8% in the MSCI EM Mid Cap Index as of 31 December 2025). The sector experienced tariff-related volatility, which led many corporates to delay discretionary IT spending decisions into 2026. As Gartner, a leading independent IT research and advisory firm, has noted, this resulted in “a business pause on net-new spending due to a spike in global uncertainty.”

    Looking ahead, Gartner forecasts global IT spending growth of 9.8% in 2026. We view the recent weakness as cyclical, with recovery prospects supported by AI-driven demand and the resumption of previously deferred projects.

    As a result of these factors, relative performance this year has not matched the strong returns achieved in prior periods. While disappointing, such outcomes are not unusual for strategies with a high active share. They are an inherent feature of a differentiated investment approach and a key driver of long-term results. Periods of softer relative performance have occurred in the past and have often been followed by improved relative outcomes as stock-specific fundamentals reassert themselves. This is reflected in the trust’s since-inception outperformance of 6.5% against the MSCI EM Mid Cap Index, despite the current year’s drawdown.

    Active portfolio management remained central to the team’s day-to-day process throughout the year. We increased exposure to existing high-conviction holdings trading at attractive valuations following periods of volatility and selectively initiated positions from our watchlist, taking advantage of temporary share price dislocations in companies we believe were unfairly impacted by broader market sentiment.

    This has allowed us to acquire high-quality stocks at discounts to historical valuations during one of the weaker periods of relative performance for quality companies in recent years. At the same time, we trimmed or exited positions where changes in the macro environment had, in our assessment, materially weakened the investment case.

    Over the course of the year, we rigorously revisited every investment case, challenging attribution, portfolio exposures and our assumptions around earnings and valuation. Above all, we have remained committed to our investment philosophy. Our focus is unchanged: investing in high-quality, lesser-known, well-managed companies that compound value over time and align with our strategy and responsible investment principles.

    Style Headwinds Have Driven Valuation Compression

    Source: Bloomberg, as of 31 December 2025. * Adjusted.

    In this environment, the portfolio’s underlying fundamentals remain supportive. Market consensus forecasts a 23% forward EPS CAGR (three to five years) for the average portfolio company, supported by strong balance sheets and profitability, including a three-year average ROE of 23%, net debt/EBITDA of -0.5 and profit margins of 16%. In several cases, companies have delivered results ahead of expectations and seen earnings estimates revised upwards, yet share price performance has remained subdued.

    MMIT Portfolio Offers High Growth and Profitability

    Source: Bloomberg. All figures Portfolio/Index averages in USD as of 31 December 2025. Portfolio data is based on available data for portfolio companies.

    Periods such as these—following a challenging year but characterised by resilient fundamentals and improving growth prospects—are often when long-term opportunities in high-quality businesses begin to emerge. In that sense, the conditions outlined throughout this commentary bring us full circle to the observation by Ruchir Sharma: “the best time to buy quality stocks is now.”

  • MEMF Q4 2025 Manager Commentary

    ”The best time to buy quality stocks is now”.

    Ruchir Sharma, Financial Times 01.12.2025

    Dear Fellow MEMF Shareholder,

    Since the inception of the strategy in 2018, our objective has remained unchanged: to deliver long-term performance by identifying high-quality, innovative, under-researched mid-cap compounders with strong fundamentals that are not represented in the benchmark. This disciplined investment philosophy has driven strong results over prior years, culminating in 21.7% outperformance (MEMF Private C USD Founder) versus the MSCI EM Mid Cap Index in USD terms from inception through to the end of 2024.

    However, 2025 played out differently, despite emerging markets finally ending a decade of underperformance versus developed markets. The year proved challenging in relative terms for the strategy, as the market environment was particularly difficult for quality-oriented mid-cap stocks. Returns were increasingly driven by a narrow group of large, liquid companies and by style dynamics that ran counter to our investment approach.

    That said, Q4 showed early signs of stabilisation and improvement. During the quarter, MEMF’s net asset value increased by 2.9% (Private C USD Founder), compared with 2.2% for the MSCI EM Mid Cap Index (Net TR) in USD terms. This relative improvement was supported by solid operational performance across several portfolio holdings, with a number delivering results ahead of expectations.

    Emerging markets recorded steady gains over the quarter, finishing the year as the strongest-performing global equity asset class. As is often the case in the early stages of a recovery, initial inflows were concentrated in the largest and most liquid stocks. Within the MSCI EM Index, the top five holdings accounted for over 40% of total returns in 2025.

    Performance in EM Driven by a Few Large Companies

    Source: Bloomberg. As of 31 December 2025.

    Our investment universe is deliberately focused on lesser-known, under-researched small- and mid-cap companies across emerging markets, where we believe our bottom-up research adds the greatest value by looking beyond well-known benchmark constituents. The under-researched nature of this segment—typically marked by limited coverage, lower visibility and minimal benchmark overlap—can give rise to pricing inefficiencies that are largely absent in the highly efficient mega-cap space.

    Active management is more likely to add value in these less crowded areas of the market, where returns are driven more by company-specific fundamentals than by index flows. Against a backdrop of unusually narrow market leadership, we believe this positioning may offer meaningful potential for relative catch-up as fundamentals reassert themselves.

    During 2025, the strategy’s emphasis on quality encountered significant style headwinds, with quality stocks—especially within emerging markets—suffering one of their worst periods of relative underperformance compared with the broader benchmark. Smaller companies, particularly growth-oriented businesses in the technology sector, were disproportionately affected by continued macroeconomic and geopolitical uncertainty.

    Investor risk appetite remained constrained, with capital rotating towards perceived safe-haven assets such as gold and towards larger, more liquid equities viewed as more resilient in volatile markets. During this period, investors favoured sectors such as banks, commodities and defence-related industries, supported by higher interest rates, elevated fiscal and defence spending, and ongoing geopolitical tensions. This defence-led rotation provided relative support to parts of the industrials and commodities sectors.

    These areas, which are deliberately excluded from the portfolio due to their regulatory complexity, capital intensity and limited pricing power, were generally trading at lower valuation multiples and tended to be more resilient during periods of market correction.

    EM Quality Has Fallen Behind Value This Year

    Source: Bloomberg, MCP. Figures refer to past performance. Past performance is not a reliable indicator for future performance. As of 31 December 2025.

    Additionally, China was a major contributor to emerging market performance in 2025, accounting for approximately 25% of MSCI Emerging Markets Index gains while representing around 23.6% of the index. However, we believe the rally has been driven primarily by multiple expansion, improved sentiment and policy support rather than an improvement in underlying fundamentals such as earnings growth. Economic data remains weak, highlighting a disconnect between market performance and a meaningful recovery, and gains have been concentrated largely in the technology sector, where valuations have become less compelling.

    Structural risks also remain, including the potential for abrupt and unpredictable regulatory intervention, as experienced in 2021. Against this backdrop, we continue to approach the market with caution, while remaining open to selectively deploying capital where individual companies meet our quality, governance and valuation criteria, without compromising discipline in pursuit of exposure.

    Performance was also negatively impacted by our exposure to the software and IT services sector (20.2% in MEMF versus 1.8% in the MSCI EM Mid Cap Index as of 31 December 2025). The sector experienced tariff-related volatility, which led many corporates to delay discretionary IT spending decisions into 2026. As Gartner, a leading independent IT research and advisory firm, has noted, this resulted in “a business pause on net-new spending due to a spike in global uncertainty.”

    Looking ahead, Gartner forecasts global IT spending growth of 9.8% in 2026. We view the recent weakness as cyclical, with recovery prospects supported by AI-driven demand and the resumption of previously deferred projects.

    As a result of these factors, relative performance this year has not matched the strong returns achieved in prior periods. While disappointing, such outcomes are not unusual for strategies with a high active share. They are an inherent feature of a differentiated investment approach and a key driver of long-term results. Periods of softer relative performance have occurred in the past and have often been followed by improved outcomes as stock-specific fundamentals reassert themselves.

    Active portfolio management remained central to our day-to-day process throughout the year. We increased exposure to existing high-conviction holdings trading at attractive valuations following periods of volatility and selectively initiated positions from our watchlist, taking advantage of temporary share price dislocations in companies we believe were unfairly impacted by broader market sentiment.

    This approach has allowed us to acquire high-quality stocks at discounts to historical valuations during one of the weaker periods of relative performance for quality companies in recent years. At the same time, we trimmed or exited positions where changes in the macro environment had, in our assessment, materially weakened the investment case.

    Over the course of the year, we rigorously revisited every investment case, challenging attribution, portfolio exposures and assumptions around earnings and valuation. Above all, we have remained committed to our investment philosophy. Our focus is unchanged: investing in high-quality, lesser-known, well-managed companies that compound value over time and align with our strategy and responsible investment principles.

    Style Headwinds Have Driven Valuation Compression

    Source: Bloomberg, as of 31 December 2025. * Adjusted.

    In this environment, the portfolio’s underlying fundamentals remain supportive. Market consensus forecasts a 26% forward EPS CAGR (three to five years) for the average portfolio company, supported by strong balance sheets and profitability, including a three-year average ROE of 25%, net debt/EBITDA of -0.7 and profit margins of 15%. In several cases, companies have delivered results ahead of expectations and seen earnings estimates revised upwards, yet share price performance has remained subdued due to the macro headwinds described above.

    MEMF Portfolio Offers High Growth and Profitability

    Source: Bloomberg. All figures Portfolio/Index averages in USD as of 31 December 2025. Portfolio data is based on available data for portfolio companies.

    Periods such as these—following a challenging year but characterised by resilient fundamentals and improving growth prospects—are often when long-term opportunities in high-quality businesses begin to emerge. In that sense, the conditions outlined throughout this commentary bring us full circle to the observation by Ruchir Sharma: “the best time to buy quality stocks is now.”

  • Emerging markets stocks have soared in 2025: Is this time different – and should you invest?

    View Article in This is Money

  • Meet the manager: Carlos von Hardenberg

    Meet the manager: Carlos von Hardenberg

    We’re excited to share the AIC’s Meet the Manager feature with Carlos von Hardenberg, Lead Manager of Mobius Investment Trust and the Mobius Emerging Markets Fund.

    If you weren’t a fund manager, what job would you do? 

    I would have loved to be an entrepreneur, as I’ve always admired their vision, courage, and resilience in turning ideas into lasting businesses. Although I guess that mirrors what we do as investors – seeking out listed companies often still led or owned by founding families, backing those with genuine entrepreneurial spirit and a long-term horizon, and helping them grow further through our active engagement.

    What was the proudest moment of your career?

    For me, pride comes less from one single moment and more from a 25-year journey in investing, constantly learning, finding new opportunities, and growing along the way. None of this would have been possible without the unwavering support of my wife, who not only encouraged me but also moved with me across countries and continents. That partnership has been the foundation for everything I’ve been able to achieve professionally.

    What was the most difficult moment of your career and why?

    In hindsight, leaving Franklin Templeton was a big step and did not come easy, as I had great respect and appreciation for my colleagues there. That said, setting up a new fund in this industry, especially doing so only a year and a half before the Covid-19 pandemic broke out, was the greatest challenge of my career.

    What advice would you give to your 20-year-old self?

    Be curious, open-minded and travel as much as possible. In terms of investing, focus on Asia as this is where a lot of the greatest innovation lies.

    Away from the workplace, how do you spend your time?

    I enjoy spending time with my family and being outdoors, whether that’s hiking in the mountains, cycling or simply exploring nature together.

    Tell us about the last book you read.

    The last book I read was Chip War. It offers a fascinating account of the semiconductor industry, weaving together historical context, geopolitical dynamics, and the stories of the individuals who shaped it. I found the discussion of Russia’s role particularly insightful, as well as the vivid characterisations of the pioneers behind the industry. Alongside the biography of Morris Chang, it’s a must-read.

    What’s the last concert you went to?

    The Weeknd, amazing! And Ann-Sophie Mutter in New York, mind-blowing!

    What is your favourite film of all time and why?

    The Usual Suspects and The Godfather. Amazing acting, great music and unparalleled tension.  

    In your personal life, what would you like to achieve in the next 12 months?

    Quality time with friends and family, as well as good leadership to support my colleagues.
     

    🔗 https://www.theaic.co.uk/aic/news/commentary/meet-the-manager-carlos-von-hardenberg [theaic.co.uk]

  • MEMF Q3 2025 Manager Commentary

    MEMF Q3 2025 Manager Commentary

    ”It’s not what happens to you, but how you react that matters.”

    Epictetus

    Dear Fellow MEMF Shareholder,

    This year reminded us what active investing truly means — to act when necessary, to be patient when appropriate, and to hold conviction when it stands tested, revisited, and reaffirmed under new circumstances.

    Active investing can also mean diverging from the market — sometimes sharply. That divergence can be uncomfortable in the short term, as it has been this year, but it is also what drives long-term results. By definition, active investing means being different from the benchmark, taking positions built on conviction, not composition, and aiming to deliver differentiated and sustainable returns. In previous years, the same approach led to significant outperformance, and we believe it has once again left the portfolio better positioned for what lies ahead. Our focus remains unchanged: we aim to invest in high-quality, well managed companies that compound value over time and align with our strategy and responsible investment principles.

    Portfolio companies have shown the same proactive spirit. CarTrade for example, expanded through the OLX integration and doubled its user reach; E Ink committed to new capacity for next-generation displays; TOTVS continued to build on its strategic acquisition of StoneCo’s Linx unit to strengthen its leadership in enterprise retail software; and Park Systems continued to broaden its nanotechnology tools across industries, just to name a few.

    This spirit and innovation is clearly paying off as companies across the portfolio have delivered strong Q2 reports with many beating expectation and upgrading their outlooks for the coming years. CarTrade’s revenue increased by 22% YoY and Profit After Tax increased 106% YoY; E Ink’s revenue increased by 35% YoY and gross margin increased by 60% (+15pp); TOTVS’ earnings beat their EPS estimate by +1.6%; and Park Systems’ revenue increased by 17% YoY, 5% ahead of Bloomberg consensus.

    Fundamentals Should Drive Recovery: Q2 2025 Reports

    Source: MCP, Bloomberg, company source. Figures refer to past performance. Past performance is not a guide to future performance.

    Despite these strong company-level results, this year has been challenging, with gains concentrated in benchmark-heavy countries and sectors. Tariff-related uncertainty in the first half of the year pushed investors toward “safe havens,” while in emerging markets, value outperformed quality as capital rotated into lower-valuation, more defensive sectors like financials amid EM rate cuts. A defence-led rally boosted industrials, and China’s stimulus- and liquidity-driven rebound lifted the benchmark.

    Meanwhile, our overweight in software weighed on performance as companies delayed IT projects in a volatile environment. In general, much of the rally in emerging markets this year has been driven by a handful of mega-cap stocks, while less-known companies have attracted less investor attention. The MSCI Emerging Markets Index is up approximately 28% year-to-date, with internal analysis suggesting that the top ten Asian technology names account for almost half of these gains1.

    In Q2, we began to see early signs of a potential reversal, indicating that recent portfolio headwinds may have been cyclical. This view is cautiously supported by improving macro conditions — including easing tariff volatility, momentum in AI and technology, further interest rate cuts, and a declining USD — as well as country-specific catalysts in India, Taiwan, Korea, and Brazil. While these factors could provide a more supportive backdrop, we expect any recovery to become clearer over the course of next year as these trends gradually come into play.

    The quarter began with renewed tariff uncertainty as President Trump again delayed the implementation of reciprocal tariffs, allowing time for several major trade deals to be struck with the EU, Korea, and Japan. Finally, tariffs took effect on 1 August across more than 90 countries, hitting India and Brazil hardest at 50%. Since then, trade-related volatility has eased, and markets have reacted less sharply to new tariff announcements than earlier in the year, when smaller emerging-market stocks were disproportionately affected as investors rotated into larger, lower-valued names and other perceived safe-haven assets amid heightened uncertainty.

    EM Quality has Fallen Behind EM Value YTD

    Source: Bloomberg. As of 30 September 2025.

    During the early-year volatility, we increased our exposure to existing high-conviction names and selectively added new names from our watchlist by taking advantage of attractive valuations and temporary dislocations from companies that we believe were unfairly impacted by broader market sentiment. With tariff related volatility likely subsiding, quality names, should now be better placed for a recovery.

    The technology sector once again outperformed most other sectors globally, driving gains in both the US and China. Strong Q2 results from US hyperscalers and confirmation of continued large-scale AI capital expenditure reignited confidence in AI-led growth. To put this into perspective, the Guardian reported that Big Tech has invested more than $155 billion in AI this year2 — roughly equivalent to the cost of building the International Space Station. Meanwhile, policy support for domestic chipmakers and new AI product launches from China’s leading technology firms have fuelled a rally in Chinese and Hong Kong tech stocks.

    Hyperscaler Capex Driving AI Momentum

    Source: CL Taiwan, Daiwa.

    This strength in US and Chinese technology has also supported companies, including many in our portfolio, in emerging markets like Taiwan and South Korea which play vital roles in AI supply chains. For example, NVIDIA’s Rubin GPU rollout and rising ASIC volumes are boosting demand across the semiconductor supply chain, benefitting companies such as Elite Material, a global leader in high-performance copper clad laminates used in printed circuit boards. In its Q2 report, Elite announced an additional round of capacity expansion in 2026 due to strong demand, with revenue up 40% YoY. Other examples include Chroma raising its guidance for system-level testing revenue in light of rising demand from leading ASIC and GPU projects.

    Other positive macro news for emerging markets comes in the form of the Federal Reserve’s first interest rate cut of the year this September, with rates now targeted at 4-4.25%. Fed officials also hinted that further rate cuts would follow in the remainder of the year. Lower US interest rates tend to benefit emerging markets by making lower yielding developed market assets less attractive, potentially prompting investors to seek higher returns in EMs some of which are also experiencing moderating local inflation, lower public debts and higher real rates. This can boost foreign direct investment and support EM asset prices. However, the impact is uneven, as greater risk appetite and lower US yields cannot fully offset weak macroeconomic conditions or poor corporate fundamentals in certain markets. Nevertheless, the continuation of the downward trajectory of global rate cuts should be positive for emerging markets overall.

    Within our key markets, local factors are at play indicating the potential for country-level recoveries. Taiwan should benefit from the global AI momentum mentioned above with its global leadership in advanced semiconductors underpinning both industry demand and geopolitical importance. Korea should profit from a semiconductor recovery, as well as governance reforms and its Value Up initiative which is creating potential to unlock shareholder value by improving governance and capital allocation.

    Meanwhile, India’s combination of fiscal prudence, resilient domestic consumption grounded in a young population, moderating inflation, and pro-growth policy support creates a constructive macro backdrop underpinning the country’s long term, high growth trajectory. In Brazil, while we expect volatility ahead of the 2026 elections, there is a clear path towards SELIC rate cuts and normalisation of real interest rates which would provide a catalyst for the Brazilian equities market.

    China Rally Driven by Multiple Expansion, Not EPS Growth

    Source: Macquarie.

    While China has dominated headlines this year with a strong market rebound placing it among the top-performing countries, we believe the rally has been driven primarily by sentiment and policy stimulus, rather than underlying fundamentals, as reflected in persistently weak economic data this quarter. The lack of a clear recovery in the real economy raises questions about the rally’s sustainability. Additionally, the rally has been largely concentrated in the tech sector which is now trading at less attractive valuations. For these reasons, we continue to exercise caution. We have been carefully screening the Chinese market across select sectors to identify companies that meet our stringent quality and governance standards. While only a few appear potentially aligned with these criteria, we remain disciplined and will continue our search without compromising on quality.

    Overall, as we reflect on the year, we are reminded of Epictetus’ words: “It’s not what happens to you, but how you react to it that matters.” While this year has presented significant challenges, it has only strengthened our conviction in both our strategy and our portfolio companies. Rather than being discouraged by volatility, we used it as an opportunity to deepen our positions in high-quality, well-managed businesses.

    By staying disciplined and true to our active, conviction-driven approach, we believe we are now well positioned to benefit from key macro, country and sector specific tailwinds over the coming years. Reflecting this confidence, the team has increased its investment in the strategy — a clear signal of our optimism about the future of our portfolio companies and the opportunities ahead in emerging markets which we intend to capitalise on.

    1. Bloomberg, MSCI ↩︎
    2. https://www.theguardian.com/technology/2025/aug/02/big-tech-ai-spending ↩︎

  • MMIT Q3 2025 Manager Commentary

    MMIT Q3 2025 Manager Commentary

    ”It’s not what happens to you, but how you react that matters.”

    Epictetus

    Dear Fellow MMIT Shareholder,

    This year reminded us what active investing truly means — to act when necessary, to be patient when appropriate, and to hold conviction when it stands tested, revisited, and reaffirmed under new circumstances.

    Active investing can also mean diverging from the market — sometimes sharply. That divergence can be uncomfortable in the short term, as it has been this year, but it is also what drives long-term results. By definition, active investing means being different from the benchmark, taking positions built on conviction, not composition, and aiming to deliver differentiated and sustainable returns. In previous years, the same approach led to significant outperformance, and we believe it has once again left the portfolio better positioned for what lies ahead. Our focus remains unchanged: we aim to invest in high-quality, well managed companies that compound value over time and align with our strategy and responsible investment principles.

    Portfolio companies have shown the same proactive spirit. CarTrade for example, expanded through the OLX integration and doubled its user reach; E Ink committed to new capacity for next-generation displays; TOTVS continued to build on its strategic acquisition of StoneCo’s Linx unit to strengthen its leadership in enterprise retail software; and Park Systems continued to broaden its nanotechnology tools across industries, just to name a few.

    This spirit and innovation is clearly paying off as companies across the portfolio have delivered strong Q2 reports with many beating expectation and upgrading their outlooks for the coming years. CarTrade’s revenue increased by 22% YoY and Profit After Tax increased 106% YoY; E Ink’s revenue increased by 35% YoY and gross margin increased by 60% (+15pp); TOTVS’ earnings beat their EPS estimate by +1.6%; and Park Systems’ revenue increased by 17% YoY, 5% ahead of Bloomberg consensus.

    Fundamentals Should Drive Recovery: Q2 2025 Reports

    Source: MCP, Bloomberg, company source. Figures refer to past performance. Past performance is not a guide to future performance.

    Despite these strong company-level results, this year has been challenging, with gains concentrated in benchmark-heavy countries and sectors. Tariff-related uncertainty in the first half of the year pushed investors toward “safe havens,” while in emerging markets, value outperformed quality as capital rotated into lower-valuation, more defensive sectors like financials amid EM rate cuts. A defence-led rally boosted industrials, and China’s stimulus- and liquidity-driven rebound lifted the benchmark.

    Meanwhile, our overweight in software weighed on performance as companies delayed IT projects in a volatile environment. In general, much of the rally in emerging markets this year has been driven by a handful of mega-cap stocks, while less-known companies have attracted less investor attention. The MSCI Emerging Markets Index is up approximately 28% year-to-date, with internal analysis suggesting that the top ten Asian technology names account for almost half of these gains1.

    In Q2, we began to see early signs of a potential reversal, indicating that recent portfolio headwinds may have been cyclical. This view is cautiously supported by improving macro conditions — including easing tariff volatility, momentum in AI and technology, further interest rate cuts, and a declining USD — as well as country-specific catalysts in India, Taiwan, Korea, and Brazil. While these factors could provide a more supportive backdrop, we expect any recovery to become clearer over the course of next year as these trends gradually come into play.

    The quarter began with renewed tariff uncertainty as President Trump again delayed the implementation of reciprocal tariffs, allowing time for several major trade deals to be struck with the EU, Korea, and Japan. Finally, tariffs took effect on 1 August across more than 90 countries, hitting India and Brazil hardest at 50%. Since then, trade-related volatility has eased, and markets have reacted less sharply to new tariff announcements than earlier in the year, when smaller emerging-market stocks were disproportionately affected as investors rotated into larger, lower-valued names and other perceived safe-haven assets amid heightened uncertainty.

    EM Quality has Fallen Behind EM Value YTD

    Source: Bloomberg, as of 30 September 2025.

    During the early-year volatility, we increased our exposure to existing high-conviction names and selectively added new names from our watchlist by taking advantage of attractive valuations and temporary dislocations from companies that we believe were unfairly impacted by broader market sentiment. With tariff related volatility likely subsiding, quality names, should now be better placed for a recovery.

    The technology sector once again outperformed most other sectors globally, driving gains in both the US and China. Strong Q2 results from US hyperscalers and confirmation of continued large-scale AI capital expenditure reignited confidence in AI-led growth. To put this into perspective, the Guardian reported that Big Tech has invested more than $155 billion in AI this year2 — roughly equivalent to the cost of building the International Space Station. Meanwhile, policy support for domestic chipmakers and new AI product launches from China’s leading technology firms have fuelled a rally in Chinese and Hong Kong tech stocks.

    Hyperscaler Capex Driving AI Momentum

    Source: CL Taiwan, Daiwa.

    This strength in US and Chinese technology has also supported companies, including many in our portfolio, in emerging markets like Taiwan and South Korea which play vital roles in AI supply chains. For example, NVIDIA’s Rubin GPU rollout and rising ASIC volumes are boosting demand across the semiconductor supply chain, benefitting companies such as Elite Material, a global leader in high-performance copper clad laminates used in printed circuit boards. In its Q2 report, Elite announced an additional round of capacity expansion in 2026 due to strong demand, with revenue up 40% YoY. Other examples include Chroma raising its guidance for system-level testing revenue in light of rising demand from leading ASIC and GPU projects.

    Other positive macro news for emerging markets comes in the form of the Federal Reserve’s first interest rate cut of the year this September, with rates now targeted at 4-4.25%. Fed officials also hinted that further rate cuts would follow in the remainder of the year. Lower US interest rates tend to benefit emerging markets by making lower yielding developed market assets less attractive, potentially prompting investors to seek higher returns in EMs some of which are also experiencing moderating local inflation, lower public debts and higher real rates. This can boost foreign direct investment and support EM asset prices. However, the impact is uneven, as greater risk appetite and lower US yields cannot fully offset weak macroeconomic conditions or poor corporate fundamentals in certain markets. Nevertheless, the continuation of the downward trajectory of global rate cuts should be positive for emerging markets overall.

    Within our key markets, local factors are at play indicating the potential for country-level recoveries. Taiwan should benefit from the global AI momentum mentioned above with its global leadership in advanced semiconductors underpinning both industry demand and geopolitical importance. Korea should profit from a semiconductor recovery, as well as governance reforms and its Value Up initiative which is creating potential to unlock shareholder value by improving governance and capital allocation.

    Meanwhile, India’s combination of fiscal prudence, resilient domestic consumption grounded in a young population, moderating inflation, and pro-growth policy support creates a constructive macro backdrop underpinning the country’s long term, high growth trajectory. In Brazil, while we expect volatility ahead of the 2026 elections, there is a clear path towards SELIC rate cuts and normalisation of real interest rates which would provide a catalyst for the Brazilian equities market.

    China Rally Driven by Multiple Expansion, Not EPS Growth

    Source: Macquarie.

    While China has dominated headlines this year with a strong market rebound placing it among the top-performing countries, we believe the rally has been driven primarily by sentiment and policy stimulus, rather than underlying fundamentals, as reflected in persistently weak economic data this quarter. The lack of a clear recovery in the real economy raises questions about the rally’s sustainability. Additionally, the rally has been largely concentrated in the tech sector which is now trading at less attractive valuations. For these reasons, we continue to exercise caution. We have been carefully screening the Chinese market across select sectors to identify companies that meet our stringent quality and governance standards. While only a few appear potentially aligned with these criteria, we remain disciplined and will continue our search without compromising on quality.

    Overall, as we reflect on the year, we are reminded of Epictetus’ words: “It’s not what happens to you, but how you react to it that matters.” While this year has presented significant challenges, it has only strengthened our conviction in both our strategy and our portfolio companies. Rather than being discouraged by volatility, we used it as an opportunity to deepen our positions in high-quality, well-managed businesses.

    By staying disciplined and true to our active, conviction-driven approach, we believe we are now well positioned to benefit from key macro, country and sector specific tailwinds over the coming years. Reflecting this confidence, the team has increased its investment in the strategy — a clear signal of our optimism about the future of our portfolio companies and the opportunities ahead in emerging markets which we intend to capitalise on.

    1. Bloomberg, MSCI ↩︎
    2. https://www.theguardian.com/technology/2025/aug/02/big-tech-ai-spending ↩︎

  • Putting India Back in the Spotlight

    While China’s equity rally has dominated headlines, in Global Funds Asia, Carlos Hardenberg highlights why India’s fundamentals, sustainable growth, and high-quality businesses deserve renewed focus.

    Key highlights include:

    Accelerating GDP growth: 7.8% in Q2 2025, more than double the global average.
    Fiscal strength and investment: Infrastructure spending has doubled over the last decade, with a narrowing fiscal deficit.
    Global resilience: Domestic consumption (60% of GDP) shields India from external shocks like tariffs.
    Policy and inflation improvements: Easing inflation, rate cuts, and simplified GST reforms are driving confidence.
    High-quality opportunities: Founder-led, well-governed companies in sectors like technology, industrials, and consumer goods.

    Carlos concludes that India’s robust macro backdrop and unique position in emerging markets make it a standout long-term investment opportunity.

    🔗 Read the full article here: https://fundsglobalasia.com/putting-india-back-in-the-spotlight/ [fundsglobalasia.com]

  • Mobius Investment Trust Webinar October 2025

    On 17 October 2025, the Mobius Investment Trust portfolio manager Carlos Hardenberg hosted a webinar on Investor Meet Company to help retail investors better understand the opportunities within emerging markets, as well as outlining MMIT’s differentiated approach to generating long-term capital growth across emerging markets.

    View Recording