Benchmarked against the MSCI Frontier Market Index, the VAM Frontier Markets Fund will follow an all-cap strategy, typically holding a “diversified” portfolio of 60-90 companies domiciled or doing business in the 33 countries classified by the MSCI as frontier markets.
The scheme has the highest allocation to MENA countries with a 33.6% weighting, followed by Asian frontier markets with a 24.3% allocation and Africa with a 14.4% weighting, according to the fund’s fact sheet.
“These markets maintain remarkable demographics and strong future growth potential,” said Chad Cleaver, the fund’s portfolio manager.
“Many consumer-related industries are at early stages of development and increasing local demand – such as in banking services, retail merchandising, mobile penetration and auto sales – is a significant driver of growth.”
US-based boutique investment advisor and partner of VAM Funds, Driehaus Capital, is the investment manager of the fund.
Cleaver, who also co-manages the VAM Emerging Markets Growth Fund and is the lead portfolio manager of Driehaus’s emerging markets small cap growth strategy, said the frontier markets have small market capitalisation-to-GDP ratios relative to developed and emerging markets, suggesting an undervalued opportunity set.
“Supporting the opportunity is the fact that foreign direct investment is increasing, which provides an additional significant driver of growth within the frontier universe,” he said.
The scheme levies a 2.25% annual charge.
VAM is a specialist fund manager manages with $650m in assets under management. Its fund range is currently managed by Driehaus Capital Management, Enhanced Investment Products, Fleming Family & Partners, Newscape Capital Group, VPB Finance and Opportunité.
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The VAM Frontier Market Fund will be benchmarked against the MSCI Frontier Markets Index, which has outperformed the S&P and the Heng Seng over the last year.
