RWC Partners is to launch a new fund, the RWC Next Generation Emerging Markets Fund, for its Emerging & Frontier Markets team, after seeing significant interest from investors.
The fund will be managed by James Johnstone (pictured), who, together with John Malloy, heads up RWC’s Emerging & Frontier Markets team, and will follow an existing strategy managed by the team since 2014.
The RWC Next Generation Emerging Markets Fund is designed to provide investors with unconstrained access to growth opportunities in the emerging and frontier market universe that are under-represented by current indices and funds.
James Johnstone, Portfolio Manager, RWC, says: “Our opportunity set here spans both the smaller emerging economies and the larger, more liquid frontier markets. The MSCI Emerging Markets Index is currently highly concentrated: 86 per cent lies in eight countries with the remaining 16 representing only 14 per cent. Likewise, within the MSCI Frontier Markets Index we see economies which are largely under-owned but are now following the developmental pathways successfully followed by countries more traditionally referred to as ‘emerging’.”
“By investing in countries at an earlier stage of development versus large emerging markets – such as China, Brazil, India and Russia – we’re aiming to provide differentiated exposure to rapidly developing economies which also have low correlations to both developed markets and each other, resulting in a truly diversified range of companies and countries.”
Tord Stallvik, Head of Business Development at RWC Partners, says: “Asset allocators are increasingly seeking genuine sources of diversification following a tumultuous year in which many asset classes performed poorly and correlations were high.”
“Smaller emerging markets – those we consider to be the “next generation” of emerging markets – provide an interesting solution for those wanting to diversify their equity exposure into countries and companies which are likely to be the future drivers of economic prosperity: the dynamics we see here are similar to those of larger emerging markets 15 years ago.”
“This strategy is particularly compelling coming from a team which truly understands the powerful trends in play in frontier and emerging markets and have a significant amount of experience investing successfully in them.”
Expected to launch on 20 March 2019, the fund will hold between 50-70 positions with minimum market capitalisations of USD750m or daily dealing volumes of at least USD2 million. The portfolio will have exposure to sectors the team believes are well placed to benefit from smaller emerging markets investment themes, such as urbanisation, including financials, real estate, consumer staples and industrials.
The fund will be structured as part of the RWC Funds Luxembourg-domiciled SICAV and will sit alongside RWC’s range of emerging markets and frontier markets strategies, which include the USD1.1 billion RWC Global Emerging Markets Fund.
The 18-strong investment team currently manages over USD6 billion on behalf of its clients and brings together the economic and cultural perspectives of 13 nationalities, speaks 16 languages and draws on business experience gained from having worked together and around the world for over twenty years.