Templeton Emerging Markets IT posts strong annual results with 41.3% NAV total return

Templeton Emerging Markets Investment Trust, or TEMIT, has delivered the kind of annual result that gets shareholders to sit up properly. For the year to 31 March 2026, its net asset value total return – that is the return on the underlying portfolio including income – came in at 41.3%, comfortably ahead of the 26.8% return from its benchmark, the MSCI Emerging Markets Index.

That is the headline. The more interesting bit is what sits underneath it: strong stock picking, a big tailwind from artificial intelligence-linked holdings in Taiwan and South Korea, a narrowing discount, and a bigger commitment to buybacks. Put simply, this was a very good year – but not a risk-free one.

Templeton Emerging Markets annual results 2026: the key numbers that matter

Metric	2026	2025
NAV total return	41.3%	8.8%
Share price total return	48.6%	13.3%
MSCI Emerging Markets Index return	26.8%	5.8%
Total net assets	£2,525.6 million	£1,985.4 million
NAV per share	267.3p	193.7p
Share price	245.5p	169.6p
Year-end discount to NAV	8.2%	12.4%
Ordinary dividend	5.25p	5.25p
Revenue earnings per share	5.39p	5.41p
Ongoing charges ratio	0.86%	0.95%

That mix is hard to argue with. Shareholders got strong capital growth, the dividend was maintained and fully covered by revenue earnings, and costs moved lower.

Why TEMIT beat the MSCI Emerging Markets Index by such a wide margin

The outperformance was not a fluke. TEMIT says its excess return over the benchmark was 15.4%, with 9.8% coming from stock selection and 4.9% from sector allocation. In plain English, the managers mostly beat the market by owning the right companies, with some help from being in the right parts of the market too.

The big winners were very clear. TEMIT had heavy exposure to Taiwan and South Korea, where technology and semiconductor names surged on AI demand. Taiwan returned 70.4% in sterling terms and South Korea returned a staggering 117.3%.

The trust’s biggest holding, TSMC, ended the year at 16.6% of the portfolio. SK Hynix was 7.2% and Samsung Electronics was 6.5%. SK Hynix alone contributed 6.2% to relative performance versus the benchmark, which is a huge number for one stock.

That tells you a lot about what happened here. TEMIT was in the right theme, early enough and with enough conviction for it to really matter.

There were weaker spots too. India hurt. The Indian market fell by more than 15% during the period, and holdings such as ICICI Bank, Genpact and Cognizant Technology Solutions were among the notable detractors. So this was not a portfolio where everything worked. The winners were simply much bigger than the losers.

TEMIT discount narrowing and the £300 million share buyback plan explained

For investment trust investors, this may be just as important as the portfolio return. TEMIT’s shares still trade below NAV – known as a discount – but that gap narrowed from 12.4% to 8.2% over the year. The average discount over the year improved from 13.8% to 9.7%.

Why does that matter? Because if the discount narrows, shareholders can get a better share price return than the NAV return. That is exactly what happened here: 48.6% share price total return versus 41.3% NAV total return.

The board has been aggressive on buybacks and it is doubling down. During the year, TEMIT spent £166.7 million buying back 79,922,725 shares. Those shares were bought at an average discount of 10.2%, which lifted NAV per share for remaining investors by 0.8%.

Now the board says it intends to repurchase up to £300 million of shares over the next 12 to 24 months. That is meaningful. Buybacks on their own do not magically erase a discount, but they can support the rating, improve liquidity and enhance per-share value if done below NAV.

Templeton Emerging Markets dividend, charges and borrowing: solid but not flashy

The total ordinary dividend is unchanged at 5.25p per share, made up of a 2.00p interim dividend already paid and a proposed 3.25p final dividend. Revenue earnings were 5.39p per share, so the payout was covered.

That will please income-focused holders, although TEMIT is not really an income story. This is still a growth trust first and foremost.

Costs improved nicely. The ongoing charges ratio fell to 0.86% from 0.95%, helped by lower fee rates and higher average net assets. There is another fee reduction coming too. From 1 July 2026, the AIFM fee will be 1% on the first £1 billion of assets and 0.5% above that, which the chairman says would imply a blended rate of just under 0.7% based on the year-end NAV.

Borrowing, or gearing, was modest at 1.2% net. TEMIT had a £122 million multi-currency revolving credit facility in place, with drawings of £40 million, USD 50 million and CNH 300 million at the year end. That is sensible rather than reckless.

The risks behind the strong Templeton Emerging Markets performance

There is plenty to like here, but investors should not kid themselves that this is a smooth ride. The chairman and managers both spent a lot of time talking about geopolitical shocks – US tariffs, US-China tension, Russia-Ukraine, and military action involving Iran. March in particular hurt returns as markets sold off on fears over oil supply disruption.

There is also concentration risk. The top 10 holdings account for a large chunk of the portfolio, and the trust is clearly leaning into semiconductor and AI supply chain names. That has worked brilliantly this year. If that theme cools off, the same concentration can work the other way.

China is another mixed picture. It remains the trust’s largest country exposure at 23.4%, but Chinese and Hong Kong equities only rose 1.5% in sterling terms over the 12-month period. The managers are selective, and they openly flag structural issues including weak demand and an ageing population.

Outlook for Templeton Emerging Markets Investment Trust after 31 March 2026

The really eye-catching postscript is what happened after the year end. Between 31 March 2026 and 21 May 2026, TEMIT’s net assets rose 26.6% to £3,197.5 million, while cum-income NAV per share jumped 27.5% from 267.3p to 340.8p.

That is a very sharp move in a short period, and it tells you emerging markets have stayed lively. The company also bought back another 3,312,050 shares between 1 April and 21 May 2026 at an average price of 305.9p.

My view is that this was an impressive annual report from TEMIT. The trust delivered strong performance, beat its benchmark by a big margin, narrowed its discount, kept the dividend steady and lowered costs. That is the positive case, and it is a strong one.

The caution is equally obvious. This trust is exposed to volatile markets, big macro events and a fairly concentrated set of winners. So while the long-term record is excellent – 220.3% NAV total return over 10 years versus 131.0% for the benchmark in the financial highlights – investors should expect bumps along the way.

For retail investors who want serious emerging markets exposure in a closed-ended fund with an active board and a proven long-term record, this update strengthens the investment case. Just do not mistake a very good year for a low-risk one.