In
this
series
of
short
profiles,
we
ask
leading
fund
managers
to
defend
their
investment
strategies,
reveal
their
views
on
cryptocurrency,
and
tell
us
what
they’d
never
buy.
This
week
our
interviewee
is Chetan
Sehgal,
lead
portfolio
manager
of
the
Templeton
Emerging
Markets
Investment
Trust
(TEMIT),
which
has
a
Morningstar
Medalist
Rating
of
Neutral.
Which
Sector
Shows
the
Biggest
Promise
in
2024?
I
think
the
semiconductor
sector
may
well
rebound
in
2024.
The
improvements
in
computing
power
with
lower
consumption
of
energy
and
miniaturisation
leads
to
new
applications
being
developed
in
addition
to
the
emergence
of
generative
language
models
which
have
the
power
to
augment
human
capability.
What’s
the
Biggest
Economic
Risk
Today?
While
there
are
significant
geopolitical
risks
facing
the
world,
and
demographic
challenges
facing
many
countries,
which
have
their
own
ramifications,
in
terms
of
economic
risk,
I
would
say
the
biggest
risk
stems
from
the
significant
increase
in
government
debt
over
the
last
several
decades
which
is
now
impacting
the
markets
as
the
risk-free
rate
has
started
to
go
up.
There
is
no
visible
way
for
governments
to
stymie
this
increase.
Describe
Your
Investment
Strategy
The
Templeton
Emerging
Markets
Investment
Trust
(TEMIT)
focuses
on
companies
with
sustainable
earning
power
at
a
discount
to
intrinsic
worth
in
a
well-diversified
portfolio.
For
us,
we
try
to
optimise
the
holy
trinity
of
stock
selection
in
the
portfolio –
profitability,
growth
and
valuations. When
evaluating
companies
for
inclusion
in
the
portfolio,
we
usually
say
that
companies
with
a
1%
higher
sustainable
margin
often
trumps
a
1%
higher
current
growth.
Which
Investor(s)
Do
You
Admire?
I
admire
George
Soros
for
the
clarity
of
his
thoughts,
Warren
Buffett
for
the
simplicity
of
his
approach
and
the
late
John
Templeton
for
his
sense
of
purpose.
Name
Your
Favourite
‘Forever
Stock’
No
stocks
are
forever
–
as
we
are
only
temporarily
able
and
temporarily
alive.
One
of
my
favourite
TEMIT
stocks
is
Taiwan
Semiconductor
Manufacturing
Company
(TSMC),
whose
chips
are
used
in
a
wide
variety
of
solutions
including
personal
computers,
automotive
and
smartphones.
That
has
come
as
close
as
possible
to
becoming
a
forever
stock.
It
has
the
strongest
platform
in
an
industry
where
being
number
two
is
not
good
enough.
TSMC’s
strength
has
been
supported
by
secular
demand
growth,
as
chips
become
smaller,
more
capable
and
consume
less
power.
Additionally,
I
admire
companies
such
as
Tencent,
which
is
amongst
the
leaders
in
social
communications,
games,
entertainment,
cloud
and
payment
services
businesses
in
China
that
has
innovated
at
scale
and
continuously
reinvented
their
business
model
despite
challenges
in
their
operating
environment
and
the
hyper
competitive
nature
of
the
Chinese
market.
What
Would
You
Never
Invest
In?
From
a
risk
perspective,
our
funds
avoid
investing
in
companies
that
have
weak
environmental,
social,
and
governance
(ESG)
attributes.
We
are
especially
cautious
of
poor
governance
standards
that
disregard
shareholder
rights.
Growth
or
Value?
Our
paramount
focus
is
on
sustainable
earnings –
be
it
growth
or
value.
We
find
growth
is
often
overestimated,
and
for
value
patience
is
often
tested.
Being
focussed
on
sustainable
earnings
is
probably
the
best
way
to
avoid
the
pitfalls
of
both
strategies
House
or
Pension?
House
–
it
gives
peace
of
mind,
a
sense
of
belonging
and
helps
one
integrate
with
society.
Crypto:
Brilliant
or
Bad?
Brilliant
in
concept
but
is
still
unproven
and
will
take
time
to
see
any
positive
results.
What
Can
be
Done
to
Improve
Diversity
in
Fund
Management?
I
believe
diversity
and
inclusion
is
essential
to
navigating
the
dynamic
landscape
in
our
industry.
Attracting,
developing
and
retaining
a
diverse
workforce
can
lead
to
better
firm
performance,
decision-making
and
client
success.
Have
you
Ever
Engaged
With
a
Company
and
Been
Particularly
Proud
(or
Disappointed)
of
the
Outcome?
Over
the
years
we
have
successfully
and
unsuccessfully
engaged
with
many
emerging
markets
companies,
some
of
whom
have
been
successful
at
capital
allocation
and
shareholder
return
policies.
In
one
instance,
in
the
case
of
a
merger
of
a
software
services
company
with
its
real
estate
affiliate,
we
took
a
stance
against
the
merger.
It
was
later
uncovered
that
not
all
was
above
board
in
the
accounts.
What’s
the
Best
Advice
You’ve
Ever
Been
Given?
There
is
no
bear
market
for
good
ideas. Therefore,
one
should
continuously
look
for
investment
opportunities
rather
than
wait
for
things
to
improve. When
the
markets
are
depressed
one
can
find
much
better
bargains.
What
Would
You
be
if
You
Weren’t
a
Fund
Manager?
If
I
wasn’t
in
financial
services,
I’d
probably
end
up
being
a
historian,
as
I
spend
a
lot
of
time
trying
to
understand
how
we
got
here.
I
could
also
have
been
into
software
as
well!
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