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Schroders launches frontier markets equity fund

By Staff

Schroders, a global asset management company with $286.1 billion under management, on Tuesday announced the launched of its frontier equity markets fund to top attractive valuations.

Schroder ISF Frontier Markets Equity fund is benchmarked against the MSCI Frontier Markets Index (the Middle East constitutes almost 60 per cent of the index).

It will be managed by Allan Conway, Head of Emerging Market Equities and Rami Sidani, head of Mena. Both fund managers are also responsible for Schroder ISF Middle East and are supported by analysts based in Dubai, Europe, Latin America and Asia.

The new Fund employs a similarly disciplined and robust investment process that has a proven track record across Schroders’ Global Emerging Markets product range.

There is a strong rationale for investing in frontier markets. They have a combined nominal GDP of $2.4 trillion (3.9 per cent of global GDP), second only to China, and comprise 12 per cent of the world’s population, of which almost 60 per cent is under 30 years of age.

Labour costs are extremely competitive and natural resources abundant. Furthermore, the investment opportunities are excellent as frontier markets are under-owned, market liberalisation is accelerating and valuations are currently attractive (41 per cent off their peaks of 2008).

In a global macro environment dominated by uncertainties, frontier markets’ low correlation with global markets also offers investors extensive diversification benefits.

Conway said: “Investors are increasingly seeking to establish a strategic allocation to emerging markets rather than using them tactically due to an increase in risk appetite, which we believe should lead to greater focus on the frontier markets. The fund strengthens our global emerging markets proposition and offers investors access to some of the fastest growing economies in the world as well as significant diversification benefits. This highlights our continued commitment to providing clients with innovative and compelling long-term investment opportunities.”

Sidani said: “We were the first international fund manager to launch an investment capability based in the Middle East and we are one of the first to have launched a frontier markets fund.”