Somerset Capital Management has confirmed the launch of the MI Somerset Emerging Markets Discovery fund.
The MI Somerset EM Discovery fund will target small and mid-cap companies that operate in emerging markets and officially launches on Wednesday 30th October 2019. Domiciled in the UK, the new Ucits fund will give investors exposure to the team behind the Somerset Emerging Markets Small Cap Strategy, which has been headed up by Mark Asquith since 2008 and has achieved annualised net excess returns of +3.01%.
Mark Asquith, the lead manager of the MI Somerset EM Small Cap and EM Discovery Funds, said: "We believe there is potentially a triple opportunity here: one, emerging markets are cheap and under-owned; two, within emerging markets, small and mid-caps have suffered their most prolonged period of underperformance versus large caps since the 1990s; and three, this fund is skewed towards cheaper areas of the market such as EMEA and Latin America, rather than Asia which dominates the benchmark."
"EM small and mid-caps have significant structural advantages over large caps. They naturally have more growth potential, tend to be more domestically exposed and have much lower analyst coverage, which makes them a sweet spot for stockpickers. The fact that they are approaching their cheapest levels relative to large caps since 2009 is an added bonus."
The MI Somerset EM Discovery fund will sit in the IA Global Emerging Markets sector and focus on companies with a market cap between $1bn and $7.5bn. Mark Asquith and the team will have the flexibility to hold onto businesses as they mature into larger ones and can also hold up to 20% in Frontier Markets.
The fund will be run with the same process and philosophy as the $488m Somerset EM Small Cap Strategy, which has outperformed its benchmark in 8 of the last 11 calendar years since its launch in 2008. Over this time the Strategy has returned 96.69% compared to 42.78% from the MSCI EM Small Cap benchmark.