William Blair Investment Management has launched a frontier market debt fund that will invest in local and hard currency denominated government debt across Asia, Latin America, Eastern Europe, the Middle East and Africa.
The William Blair Emerging Markets Frontier Debt fund will be managed by Yvette Babb and Daniel Wood, who both joined the firm to be part of its Emerging Market Debt team in 2020.
They will report to Marcelo Assalin, who heads up the team. Together they run three emerging market debt funds that have all been launched since 2020.
The largest of which – the $295m Willaim Blair Emerging Markets Debt Hard Currency fund – is up 6.7% in the almost five years it has been live.
Wood said this latest fund provides exposure to the most difficult-to-reach part of emerging markets, such as small but fast growing economies such as Kenya, Egypt, Sri Lanka and the Dominican Republic.
“Local currency denominated frontier debt has traditionally been more challenging for investors to access – the Emerging Markets Frontier Debt strategy will allow our clients to add diversification and gain exposure to these assets with the selectivity, risk controls, and expertise we have established through years of experience in investing in emerging markets,” he added.
Babb noted that while this niche subset of emerging markets can come with more risks, it also provides greater upside potential.
“Frontier markets are characterised by greater market inefficiencies, driven by lower levels of research coverage and transparency, and generally higher yields, necessitated by a greater perceived risk premium,” she said.
“These factors together provide an attractive combination of high-yielding assets and ample opportunities to uncover value-creating opportunities through an active approach.”
This article first appeared in our sister publication, Portfolio Adviser.
