Take a chance on Africa for higher returns

Barings Asset Management is launching a Frontier Markets Fund with a high conviction stance on Africa, an approach higher-risk investors could see bring them attractive returns, according to Chelsea's Juliet Schooling-Latter.

Take a chance on Africa for higher returns


The fund, which will target a minimum 70% exposure to frontier markets, will be managed by Michael Levy with assistance from Dr Ghadir Abu Leil-Cooper, head of EMEA at Barings. It will be an Ireland-domiciled, Ucits structured fund.

The fund will have significant exposure to Africa, with just under a quarter of capital being allocated to sub-Saharan Africa and more than half being ear-marked for investment in the Middle East North Africa (Mena) region.

Last year three African countries, Nigeria, Zimbabwe and Kenya, were given first-time ratings by Moody’s following increased investor demand for insight into the sovereign credit worthiness of the countries.

Juliet Schooling-Latter, head of research at Chelsea Financial Services, said: “Africa is a particularly interesting prospect for those investors with a greater risk appetite and those with a more long-term investment horizon due to the likely volatility of these funds.

“Frontier markets funds remain a niche market, but for investors with larger sums of money, or those that are prepared to take on more risk with the potential for higher returns, they are certainly an attractive investment option in the current low return market.”

According to data provided by Factset and MSCI, frontier markets are currently yielding 3.8% and emerging markets 2.6%. There are still inherent risks with frontier market investment.

GDP rates in frontier markets, meanwhile, are forecast to outpace more developed economies for the foreseeable future, while the growing, emerging middle class is expected to fuel growing demand for consumer products and services.




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