Somerset Capital Management has confirmed that it will formally launch the MI Somerset Emerging Markets Discovery fund on Wednesday 30th October, expanding the range of Emerging Markets fund offerings by the firm.
The MI Somerset Emerging Markets Discovery fund is a UK-domiciled fund that will be managed by Mark Asquith, primarily focusing on small- and mid-cap equities in Emerging Markets with a market capitalisation between $1 billion and $7.5 billion as valuations begin to approach their cheapest levels compared to large-caps since 2009. The fund will also hold up to 20% in Frontier Markets and will also tilt towards cheaper regions such as EMEA and Latin America, rather than being Asian-focused like many other funds and indexes.
It will also be run with the same process and philosophy as the UK-domiciled Somerset EM Small Cap Strategy, which is current at $488 million and has returned 96.69% since 2008 compared to the 42.78% by its benchmark, the MSCI Emerging Markets Small Cap Index.
According to InvestmentEurope.net, Asquith said:
“We believe there is potentially a triple opportunity here: one, emerging markets are cheap and under-owned; two, within emerging markets, small and mid-caps have suffered their most prolonged period of underperformance versus large caps since the 1990s; and three, this fund is skewed towards cheaper areas of the market such as EMEA and Latin America, rather than Asia which dominates the benchmark.”
“EM small and mid-caps have significant structural advantages over large caps. They naturally have more growth potential, tend to be more domestically exposed and have much lower analyst coverage, which makes them a sweet spot for stockpickers. The fact that they are approaching their cheapest levels relative to large caps since 2009 is an added bonus.”
Somerset Capital Management will not charge any fees for the first six months.
The full range of Emerging Markets funds offered by the company can be found here.