Aberdeen Frontier Markets (AFMC)’s manager has been re-positioning the portfolio by reducing exposure to Sub-Saharan Africa, adding companies in new markets and looking capture more of the momentum in markets. There is a now a greater tilt to the Asia Pacific region, where Vietnam accounts for over a quarter of the portfolio. AFMC holds a concentrated selection of companies that offer the prospect of double-digit earnings growth paired with inexpensive valuations (the weighted average current year price/earnings (P/E) ratio of portfolio companies is 10.0x)… Read more
AFMC exhibits a low correlation with its benchmark as well as to emerging (where 68% of returns can be attributed to moves in the benchmark) and developed (61%) equity markets. The manager feels that a slowdown in the global economy could increase flows into frontier markets (where growth is largely driven by domestic factors) as investors search elsewhere for returns.
Direct investment in frontier markets
AFMC aims to generate long-term capital growth, primarily from investment in equity and equity-related securities of companies listed in, or operating in, frontier markets. Frontier market countries may include countries within the MSCI Frontier Markets Index or additional countries that the investment manager deems to be such.
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