The Templeton Frontier Markets Fund will reopen with a focus on equities in the likes of Pakistan, Bangladesh, Romania and Vietnam, where valuations have improved dramatically and dividends have grown according to the firm’s chief executive Mark Mobius.
Speaking on Monday, Mobius said he expected “robust growth” in frontier markets in the coming years as reforms across governments and corporations kicked off.
The re-opened fund will be led by managing director Carlos von Hardenberg who took over management of the Templeton Emerging Markets Investment Trust (TEMIT) in 2015.
It follows news that Mobius will step back from managing 12 funds this year.
Hardenberg said: “We know frontier markets are an incredible investment opportunity. These markets are often misunderstood but they are growing very well.
“Of course you have to bring some patience, this is not a short term story, but we think the return will be far higher than any other market.
“We think now is the time as these reform processes are kicking off faster than before.”
Eight of the world’s ten fastest growing companies are frontier markets such as Ethiopia, Myanmar, Cambodia and Uzbekistan, the duo added, and improving demographics, urbanisation and reform all support expectations of good economic growth in the future.
Frontier markets are cheaper than both emerging and developed markets while offering “considerably” higher dividend yields, they said.
