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Frontier fund choices

Created:
15 May 2008
Written by:
Moira O'Neill

Our main feature highlights the appeal of investing in the Middle East and Africa, and some of the practical difficulties involved in securing exposure to the region. Here, we poll the experts to find their preferred investment vehicles.

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Mr Gilligan of Killick & Co likes New Star Heart of Africa, Epicure Qatar Equity Opportunities and the Arab Gateway fund.

NEW STAR HEART OF AFRICA

The New Star Heart of Africa Fund offers investors a rare opportunity to invest in the returns potential of sub-Saharan Africa excluding South Africa. Although some of the companies targeted by the fund will be listed on stock exchanges around the world, including Johannesburg and London, their primary business interests will be in the dynamic emerging economies of the sub-Saharan region. Manager Jamie Allsopp is also responsible for the New Star Hidden Value Fund, which has included African stocks for more than two years.

Mr Gilligan says: "Heart of Africa is the only fund with the right tax structure that you can buy and sell daily."

"We like the fact that Jamie Allsop has been investing in Africa for a while through his UK fund. It's not an insurmountable obstacle that he is based in London. He travels to Africa regularly. The fund is 30 per cent invested in cash, to take advantage of initial public offerings (IPOs). There is a big pipeline of IPOs in Nigeria. The cash in the fund is a comfort, as is the fact that a significant amount of New Star chairman John Duffield's money is invested in the fund."

Contact: www.newstaram.com, 0845 608 8704.

EPICURE QATAR EQUITY OPPORTUNITIES

Epicure Qatar Equity Opportunities gives London-listed access to the Gulf. The fund seeks to capture, principally through the medium of the Doha Securities Market, the opportunities for growth offered by the expanding Qatari economy by investing in listed companies or companies soon to be listed. It is a closed-ended investment company based on the Isle of Man. Industries Qatar, the largest holding in the portfolio, recently reported that quarterly income doubled, year on year. Qatar National Bank, the second largest holding also reported that quarterly income increased 40 per cent, reflecting the overall resilience of the Islamic financial sector to the global credit crisis.

Contact: www.epicure-qatarequity.com, 01624 692600,

ARAB GATEWAY FUND

The Arab Gateway Fund is an unregulated open-ended investment company managed by Shuaa Asset Management. It aims to achieve long-term capital appreciation through investing in listed Arabian equities. The investment universe covers UAE, Saudi Arabia, Kuwait, Qatar, Egypt and Oman. The fund also has flexibility to invest in Morocco, Tunisia, Lebanon, Bahrain, Jordan and Palestine.

Contact: www.shuaacapital.com, +971 (4) 330-3600.

FIDELITY EMERGING EUROPE, MIDDLE EAST AND AFRICA FUND

Although Mr Davies of Chartwell is not keen on African and Middle Eastern funds, if he had to choose, he says he would look at Fidelity's Emerging Europe, Middle East and Africa (EMEA) fund, launched in June 2007, which offers partial exposure. The fund is managed by Nick Price, a nine-year Fidelity veteran, who has been managing internal EMEA assets since 2005. He is supported by five EMEA analysts. Mr Price focuses on South Africa and Russia, with Turkey as his third largest holding. However he does invest in many other markets across the region, including the United Arab Emirates, Egypt and Qatar.

Contact: www.fidelity.co.uk, 0800 414126.

GARTMORE EMERGING MARKETS OPPORTUNITIES

Mr Davies would prefer to get exposure to Africa and the Middle East through a wider emerging market fund. He says: "I like Gartmore Emerging Markets Opportunities. It's a nice core fund, covering all the different stories about emerging markets. It has lots of exposure to Brazil and Russia, plus some exposure to China, India, Latin America and South Africa as well.

"But South Africa is only 4.7 per cent of the portfolio. If an emerging markets manager is giving only a small percentage to portfolio then this is a warning to individuals."

Contact: www.gartmore.com, 0800 289 336.

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