RWC Partners has launched the RWC Next Generation Emerging Markets (NGEN) Fund for its established Emerging & Frontier Markets team.
The fund, offered as part of the RWC Funds Luxembourg-domiciled SICAV, will be managed by RWC’s co-head of Emerging & Frontier markets, James Johnstone. Johnstone is supported by an 18-strong emerging and frontier investment team which currently manages over $7bn on behalf of its clients.
The fund is designed to provide investors with unconstrained access to high growth opportunities in the emerging and frontier market universe that are under-represented by current indices and funds and which represent the future of emerging markets investing.
Focusing on the less well-known countries and companies which they expect to be the big names in smaller emerging and frontier markets in the next decade and beyond, Johnstone and the team will select the countries, sectors, themes and companies they believe present the strongest return prospects, using their top-down and bottom-up fundamental analysis.
The fund will hold between 50-70 positions with minimum market capitalisations of $750m, or daily dealing volumes of at least $2 million.
At launch, the portfolio’s highest exposure is to the Philippines, Vietnam and UAE, targeting sectors including financials, real estate, consumer staples and industrials, which the team believes are well placed to benefit from smaller emerging market investment themes.
Commenting on the launch, Johnstone said:
“Smaller emerging economies and larger, more liquid frontier markets offer a compelling investment opportunity, similar to that which we saw on offer in larger emerging markets 10 to 15 years ago. These markets have low correlations to developed markets as well as each other, and so offer a truly diversified range of companies and countries, as well as rapid growth prospects.”
The fund manager also said there are a number of themes that are underrepresented in the MSCI Emerging Markets Index – such as financial inclusion, industrialization and urbanization – but which are far more prevalent in next generation emerging markets.
“Using our extensive research capabilities and focus on both bottom-up and top-down analysis we are aiming to capitalize on markets currently at the earlier stages of development where such trends are taking hold,” Johnstone added.
The fund is being launched to exploit what RWC sees as a unique opportunity in smaller emerging and frontier markets to potentially replicate the exponential growth investors have seen from China and other larger emerging markets over the past three decades, as they capitalise on many of the same growth themes.