Banor Capital, a London-based investment management firm, has announced the launch of the Aristea SICAV FIM GEM Debt fund which will focus on fixed income and debt instruments in Emerging and Frontier Markets.
The Luxembourg-domiciled Aristea SICAV FIM GEM Debt fund will seek to provide investors access to debt in Emerging and Frontier economies while having a strong focus on environmental, social and governance (ESG) criteria. The strategy will be diversified and unconstrained, with a strong focus on protecting versus market dislocations.
The portfolio is expected to comprise of 40-50 securities and will primarily invest in hard currency debt (at least 51%), but there will be room for local currency debt, corporate debt and FX. In terms of country allocation, it will invest up to a maximum of 20% in China and Russia.
The fund’s medium to long-term capital growth target stands at 3% of outperformance per annum with medium volatility. According to Bloomberg, the annual management fee will be 1.75% for the retail class and 0.95% for the institutional classes, as well as a performance fee of 10%. The fund have six classes and will be available to purchase in Euros (EUR) or US Dollars (USD).
“We think of four drivers of EM performance going forward: the top-down view of the world, the bottom-up assessment on credit risk, bond valuations, and market technicals. On balance we see a positive direction in each one of those drivers, supporting our positive outlook for EMs.
We see different responses to the shock, including interest rate cuts, fiscal expansions, quantitative easing or/and countries seeking support to external balance sheets such as the IMFs.
The launch of this new fund will work alongside the already established “New Frontiers Equity Fund” which primarily focuses on Frontier Markets, with Vietnam (22.65%), Kuwait (11.92%) and Morocco (9.80%) being the largest constituents,
The capacity to respond effectively to the shock will be determined by the countries’ initial macro conditions and their political constraints. Market wise, different policy reactions will engender different asset price responses, providing a wealth of opportunities to investors to express different views.”