Investment Adventures in Emerging Markets

No Man is an Island

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When your territory spans hundreds of countries on just about every continent and time zone, the importance of teamwork cannot be underestimated. I am extremely fortunate to have the support of a tremendous team of currently 90 professionals in the Templeton Emerging Markets Group, including 52 analysts and portfolio managers, spanning 26 countries and speaking 24 languages. I couldn’t do what I do without them! For the past 25 years, I’ve had the pleasure of working with Tom Wu, whose research responsibilities include companies in Hong Kong and the Philippines, as well as the banking sector. He’s truly a pioneer in our group, helping manage our first-ever emerging market portfolio and setting up our Hong Kong office. I felt it was high time my readers got to meet Tom, so please read on for my brief interview with this key member of my team.

Tom Wu

Tom Wu
Senior Vice President, Senior Managing Director
Portfolio Manager, Templeton Emerging Markets Group
Joined Franklin Templeton in 1987

Mark Mobius: What first attracted you to asset management as a career, and emerging markets in particular?

Tom Wu: I studied economics and finance and worked as an investment analyst on the sell side (for 1-1/2 years). I concluded that asset management would be an area where I could put my knowledge and work experience to use. As a young analyst who had only looked at Hong Kong companies, I found emerging markets fascinating because of the diversity of the markets and companies.

Mark Mobius: What is the single biggest challenge currently facing the group as you see it, and the biggest challenge you’ve faced during your career at Franklin Templeton?

Tom Wu: The challenge has always been to look for the best investment bargains for our investors. Over the years, we have expanded our research coverage and enhanced our investment methodology in order to meet that challenge. Industry dynamics are constantly changing; it is challenging to anticipate changes. I still remember that in the old days the telecommunications sector was the darling of emerging markets investors because of its high growth. This is no longer the case.

Mark Mobius: What are you most excited about as an investor in emerging markets right now?

Tom Wu: There are many emerging market companies that are undervalued, well-managed, strong and growing. We believe these companies have the potential to produce strong returns in the long run. We particularly like consumer-related companies, such as those in the consumer services, consumer durables and food and beverage sectors because per capita incomes in emerging countries have generally been rising and these companies are well-placed to potentially benefit from such a trend.

Mark Mobius: Let’s go back to when we met in 1987. Can you share an anecdote about what it was like back then to conduct research visits?

Tom Wu: I remember that first interview. You struck me as a friendly person and quick decision maker. In the old days, when we traveled to visit companies, one of things that stands out to me is how we relied on faxes to receive information. Of course, there were no emails or even mobile phones back then. Sometimes the hotel staff were so overwhelmed by our incoming faxes that they gave us the whole roll of fax paper!

Mark Mobius: Technology aside, what do you think has changed most about the industry or the markets during your career?

Tom Wu: When we first started investing in emerging markets, there were only a few markets that we could invest in directly: Singapore, Malaysia, Hong Kong, Mexico, Thailand and the Philippines. Now we can invest in about 60 emerging markets directly. Today we have more specialized investment strategies, too, such as the BRIC and frontier markets, to cater to the needs of different types of investors.

Tom Wu with Mark Mobius

Mark Mobius: Is there anything about your job or the markets that still takes you by surprise from time to time?

Tom Wu: There are always unforeseen factors and events that precipitate changes and cause surprises. Markets are inherently volatile and their swings still sometimes surprise me.

Mark Mobius: Is there a key piece of advice you’ve received during your career that you still rely on today?

Tom Wu: I think it’s very important to have long-term thinking as an investor.

Mark Mobius: Much has been made about passive and index-based investing, particularly as it relates to ETFs. Why do you believe in active management, and what advantages do you feel active management brings to an investor’s portfolio?

Tom Wu:  We aren’t constrained by a particular set of stocks in an index that we can invest in, or a particular market cap. We pay attention to various aspects of a company that can affect its value, such as corporate governance, management capability, competitive position and financial strength. I think the on-the-ground presence that our team can offer is extremely valuable, particularly in markets where few others are doing research.

Mark Mobius: Can you share some accomplishments or interests outside of work that you have enjoyed?

Tom Wu: Outside of work, I enjoy spending time with my family.

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