MW Why emerging-markets guru Mobius is 95% in cash

By Jules Rimmer

Mark Mobius, known as the father of emerging markets, has spent his entire career in an asset class notorious for its volatility and his pronouncements on have long been interpreted as sanguine. The 88-year-old has invested through every cycle and many EM crises, and his risk tolerance should be characterized as high.

Interviewed by Bloomberg TV on Wednesday, Mobius took a different tack, saying he's 95% invested in cash at the moment.

Mobius unsurprisingly justified his extremely conservative positioning on the uncertainty resulting from the tariff war. His recommendation to investors is to wait and see, at least until the political and economic landscape becomes clearer, acknowledging this process could last beyond the end of the 90-day suspension of reciprocal tariffs imposed on April 2.

Mobius predicts winners and losers from the horse trading to come but, selecting between the economic superpowers of India and China, he evinced a mild preference for the former where the tariff negotiations are likely to be less fraught and geopolitical exchanges are less antagonistic. Indian-American trade relations don't have the same history as Sino-American.

Emerging markets typically derive the majority of their revenue from exports, especially commodities and energy, and so they are especially sensitive to revisions in U.S. growth forecasts, and their ability to ship goods freely around the world.

Interestingly, the emerging markets ETF listed on the NYSE, the iShares MSCI Emerging Markets ETF EEM, has registered a 4% gain year-to-date, significantly outperforming major U.S. indices. Initially, after the Liberation Day announcement, EM stocks slumped along with most equity markets but since the 2025 low recorded on April 8, the ETF has rallied powerfully.

Much of this outperformance can be attributed to the sharp fall in the U.S. dollar DXY. Emerging markets as an asset class has traditionally been thought of as a dollar reciprocal as commodities and energy are quoted in dollars and prices usually adjust upwards as the dollar weakens. Additionally, many emerging markets borrow heavily in dollars, and their debt profile improves as their currencies appreciate. Gradual depreciation is a boon for emerging-market investors, but sudden movements less so.

Mobius argued that Trump will be reluctant to crash capital markets and so his base case will be to accumulate value once this period of instability passes. In the meantime, Mobius said he's content to collect 4-5% yields on U.S. Treasury bills BX:TMUBMUSD03M and has some, unquantified exposure to the S&P 500 SPX.

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April 30, 2025 10:24 ET (14:24 GMT)

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