London-based boutique RWC Partners has launched the RWC Next Generation Emerging Markets Fund.
The fund, offered as part of the RWC Funds Luxembourg-domiciled Sicav, will be managed by RWC’s co-head of emerging and frontier markets, James Johnstone.
Johnstone is supported by an 18-strong team which manages about $7bn (€6.2bn) on behalf of its clients.
The fund is designed to provide investors with unconstrained access to high growth opportunities in the emerging and frontier market universe which the group claims are under-represented by current indices and funds and which represent the future of emerging markets investing.
The fund will focus on less well-known countries and companies which they expect to be the big names in smaller emerging and frontier markets in the next decade and beyond, the group said.
Johnstone and the team will select the countries, sectors, themes and companies they believe present the strongest return prospects, using their top-down and bottom-up fundamental analysis.
The fund will hold between 50-70 positions with minimum market capitalisations of $750m, or daily dealing volumes of at least $2 million.
At launch, the portfolio’s highest exposure is to the Philippines, Vietnam and UAE, targeting sectors including financials, real estate, consumer staples and industrials, which the team believes are well placed to benefit from smaller emerging market investment themes.
Johnstone said: “Smaller emerging economies and larger, more liquid frontier markets offer a compelling investment opportunity, similar to that which we saw on offer in larger emerging markets 10 to 15 years ago. These markets have low correlations to developed markets as well as each other, and so offer a truly diversified range of companies and countries, as well as rapid growth prospects.”
“There are also a number of themes that are underrepresented in the MSCI Emerging Markets Index – such as financial inclusion, industrialisation and urbanisation – but which are far more prevalent in next generation emerging markets. Using our extensive research capabilities and focus on both bottom-up and top-down analysis we are aiming to capitalise on markets currently at the earlier stages of development where such trends are taking hold.”
Tord Stallvik, head of business development at RWC Partners, said: ““We are seeing a unique opportunity in smaller emerging and frontier markets to potentially replicate the exponential growth we have seen from China and other larger emerging markets over the past three decades as they capitalise on many of the same growth themes.”