Specialist fund manager VAM has launched a Luxembourg-domiciled UCITS IV fund targeting the high growth potential of frontier market equities.
The VAM Frontier Markets Fund has an investable universe primarily consisting of companies domiciled or doing business in the 33 countries classified by MSCI as frontier markets.
The fund follows an all-cap strategy and will typically hold between 60 and 90 stocks to provide exposure to a diverse portfolio of underlying companies and economies.
The fund will be available to institutional fund buyers, including discretionary fund managers, wealth managers, funds of funds, private banks, pension funds and family offices. VAM will also distribute the fund internationally through its global network of financial intermediaries and third party advisory firms.
Driehaus Capital Management, an independent US-based boutique investment advisor and long-standing partner of VAM Funds, will be the investment manager of the VAM Frontier Markets Fund.
The fund’s portfolio manager is Chad Cleaver, who also co-manages the VAM Emerging Markets Growth Fund and is the lead portfolio manager of Driehaus’s emerging markets small cap growth strategy.
Cleaver says: “Over the years the emerging markets team at Driehaus has identified and invested in a growing number of compelling opportunities within frontier markets. These markets maintain remarkable demographics and strong future growth potential. Many consumer-related industries are at early stages of development and increasing local demand – such as in banking services, retail merchandising, mobile penetration and auto sales – which is a significant driver of growth. At the same time, these markets have small market capitalisation-to-GDP ratios relative to developed and emerging markets, suggesting an undervalued opportunity set. Supporting the opportunity is the fact that foreign direct investment is increasing, which provides an additional significant driver of growth within the frontier universe.”
Nigel Watson, VAM sales director, says: “The VAM Frontier Markets Fund will provide a dedicated investment vehicle to invest in growth companies in what are already considered high growth markets; a combination which has the potential for delivering very attractive returns. Additionally, because frontier markets have historically provided lower correlations to most segments of the equity and fixed income asset classes, another benefit is that the fund should enhance diversification to an investor’s overall asset allocation.”