Frontier Markets Equity
Our Frontier Markets Equity investment process aims to outperform the MSCI Frontier Markets Index over three year rolling periods.
Schroders Frontier Markets Equity strategy provides access to some of the most dynamic and fastest growing economies in the world, supported in many cases by strong secular growth drivers. We believe the investment opportunities are similarly favorable as market liberalization is accelerating. Moreover, Frontier Markets’ relatively low correlation with developed (and emerging) markets have the potential to offer investors significant potential diversification benefits.
The Frontier Markets Equity Strategy is co-managed by Tom Wilson, Head of Emerging Market Equities, and Rami Sidani, Head of Frontier Markets and MENA. They are supported by the wider Emerging Markets Equity Team of more than 45 investment professionals with an average of 14 years’ investment experience.
We believe that developing stock markets are inefficient and provide strong potential for adding value through active fund management and that this value can be extracted through both country and stock selection. We believe that it is inappropriate to apply a systematic style bias as Frontier Market countries may differ in their stage of development. We believe that as fund managers we should manage both return and risk. Our aim is to achieve returns with the minimum level of risk through a proactive approach to risk management and a focus on the sustainability of returns. We believe that applying a systematic, disciplined approach, with a strong team culture increases our ability to add value.
Schroders has a balanced approach to investing in frontier markets. We use a mix of topdown analysis and bottom-up stock selection, looking to derive 50% of our added value from country allocation and 50% from stock selection. Our core investment process does not target any particular style bias and aims to outperform in most market environments. Our investment process begins with the gathering and analysis of information on both countries and stocks. This information is then used to decide allocations for the portfolio. Country allocation is guided by a quantitative model to which the team applies judgmental overlay while fundamental company research forms the basis of the stock selection process. We have the resources to follow a large number of companies within our universe. It is this breadth of coverage, coupled with the local nature of our research that we believe provides the means of generating unique investment ideas at the stock level.
Our investment process is summarized in the diagram below.
- Targets 50% value added from country and 50% from stock decisions
- Country allocation guided by a proprietary country model with judgmental overlay
- Stock selection driven by strong proprietary fundamental bottom up company research
- Pro-active approach to risk including disciplined risk controls tools
- Significant global resources, including an experienced investment team based across eight locations worldwide
- Separate Accounts
- Commingled Vehicle