Frontier Markets Equity Strategy
Frontier Markets Equity Strategy

Frontier Markets Equity Strategy


The Frontier Markets Equity Strategy is a growth strategy that seeks  capital appreciation by investing in equity securities of frontier emerging markets. To help achieve its objective, the Strategy combines top-down country allocation with bottom-up stock selection and disciplined risk management.

Investment Approach

The Frontier Emerging Markets Equity team believes that frontier markets are in various stages of economic development but generally lag the “mainstream” emerging markets in terms of economic and financial market reform. Their equity market performance correlation with other markets has been historically low because of their limited integration with the rest of the world’s financial markets, thus providing potential diversification benefits.

The team regards these “non-core” emerging markets as attractive, new investment destinations with unrealized economic potential. Further, it believes their rapid productivity gains, underpenetrated consumer markets and healthy infrastructure budgets are among the compelling catalysts likely to lead to strong and sustainable company-earnings potential.


Low Correlation

Opportunities in frontier markets have been domestically driven, leading to historically low correlation to each other, to emerging and to developed markets, providing potential sources of diversified alpha.1

Lower Realized Volatility

Although frontier markets are perceived as being more volatile, over the past five years their volatility has been lower than that of emerging markets due to low cross-correlation among frontier markets.2

Established Track Record

The team has been investing in emerging markets since the mid-1980s, and this strategy was one of the first dedicated pure-play frontier markets funds.

Investment Process
Integrate top-down country allocation and bottom-up stock selection
Assess global economic conditions and apply cross-sectional analysis to determine portfolio allocations
Analyze dynamics, valuation and sentiment at both country and company levels
Identify quality management, return on equity and solid free-cash-flow generation