UK Boutique Launches Frontier Equity Fund
The UK subsidiary of Italian group Banor has launched a quant-backed frontier market equity fund to tap diverse opportunities in the developing world.
Banor Capital launched the Aristea New Frontiers Equity fund for sale in Luxembourg and Italy, but is eying further expansion in UK and Switzerland.
The vehicle, which has initial assets under management of €5 million, will be managed with the added expertise of the research team at Kallisto Partners.
This is an independent Rome-based firm specialising in quantitative methodologies for investment in financial markets during their early development stages.
The new frontiers equity fund has a quantitative investment approach designed to exploit the market inefficiencies that are a feature of frontier markets.
The portfolio is highly diversified in geographical terms, with its main investments in Pakistan, Argentina, Vietnam and Kenya and is typically composed of 40-60 securities, with an average exposure of 75%.
The principal focus is on financials, consumer staples and telecommunications. The five biggest positions at launch are Hoa Phat Group, a Vietnam-listed steel maker, the Egyptian lender Commercial International Bank and the Vietnamese dairy company VDP.
‘We have noticed that the correlation between emerging and developed markets has strengthened massively and has been between 85% and 90% in the past five years.’
‘In order to diversify it is useful to invest in frontier markets, which are much less correlated, between 55% and 60%,’ Andrea Federici, manager of the fund, told Citywire Selector‘s sister site Citywire Italia.
‘We believe in this asset class, given the high growth rate of frontier economies and the low correlation within the investable universe and with respect to other asset classes,’ added Giacomo Mergoni, chief executive officer at Banor Capital.
By Federico Simonelli
www.citywireselector.com
