RWC Partners launched the Next Generation Emerging Markets (NGEN) Fund as part of the group’s Luxembourg-domiciled SICAV range.
The fund, headed up by James Johnstone, will take an unconstrained approach to investing in high growth opportunities that exist in the realm of Emerging and Frontier Markets. It’s main objective is to invest in smaller emerging market and frontier equities on a global basis in a bid to provide long-term capital appreciation. It may also invest in securities headquartered in other countries but have significant operations and derive revenue from from smaller emerging markets or frontier economies.
The fund is expected to hold between 50-70 stocks with a minimum market capitalisation of $750m or daily dealing volumes with a minimum of $2m. It will primarily focus on investing in “less well-known” companies with the potential of becoming big names in smaller markets, with a time horizon exceeding 10 years.
At launch, the portfolio has significant exposure to Vietnam, UAE and the Philippines. The fund will continue to look at countries outside of the more established Emerging Markets, such as China, in order to capture and benefit from the growth opportunities that these nations have experienced over the past few decades. Sector exposure includes (but is not limited to) financials, industrials and consumer staples.
Regarding the fund’s launch, 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.”
He added: “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 capitalize on markets currently at the earlier stages of development where such trends are taking hold.”
The fund has share classes in sterling (GBP), dollar (USD) and Euro (EUR). NGEN will be a welcome addition alongside the already established RWC Global Emerging Markets Fund that the team is currently managing.