RWC Partners has unveiled a strategy targeting growth opportunities in emerging and frontier markets alike in response to investors' growing demand.
The RWC Next Generation Emerging Markets Fund, which will be managed by James Johnstone together with John Malloy, has been designed to provide investors with unconstrained access to growth chances in the emerging and frontier market universe that are under-represented by current indices and funds.
Following the same investment strategy managed by the team since 2014, the fund will hold between 50-70 positions with minimum market capitalisation of $750m or daily dealing volumes of at least $2m.
The Luxembourg-domiciled fund, expected to launch on 20 of March, will offer exposure to sector the team believes are well placed to benefit from smaller markets investment themes, including urbanization, finance, real estate, consumer staples and industrialism.
RWC's portfolio manager James Johnstone, said: "The MSCI Emerging Markets Index is currently highly concentrated: 86% lies in 8 countries with the remaining 16 representing only 14%. Likewise, within the MSCI Frontier Markets Index we see economies which are largely under-owned but are now following the developmental pathways successfully followed by countries more traditionally referred to as "emerging".
"By investing in countries at an earlier stage of development versus large emerging markets - such as China, Brazil, India and Russia - we're aiming to provide differentiated exposure to rapidly developing economies which also have low correlations to both developed markets and each other, resulting in a truly diversified range of companies and countries."
Tord Stallvik, head of business development at RWC Partners, added: "Asset allocators are increasingly seeking genuine sources of diversification following a tumultuous year in which many asset classes performed poorly and correlations were high.
"Smaller emerging markets - those we consider to be the "next generation" of emerging markets - provide an interesting solution for those wanting to diversify their equity exposure into countries and companies which are likely to be the future drivers of economic prosperity: the dynamics we see here are similar to those of larger emerging markets 15 years ago."
The fund will be structured as part of the RWC Funds Luxembourg-domiciled sicav and will sit alongside RWC's range of emerging and frontier markets strategies, which include the $1.1bn RWC Global Emerging Markets Fund.