Castlestone launches Next-11 emerging markets fund

Castlestone Management is launching a Next-11 emerging markets equity fund in an attempt to find a new wave of equity investment opportunities.

Jim O’Neill, chief economist at Goldman Sachs, coined the “Next-11” term in 2005 as a follow-up to his term Bric, or the developing world grouping of Brazil, Russia, India and China.

The term term cover the next tier of 11 emerging markets, namely Mexico, South Korea, Indonesia, Philippines, Vietnam, Turkey, Nigeria, Egypt, Iran, Pakistan and Bangladesh.

Arrash Zafari, who will be managing the fund, says the equity markets of the Next-11 depend less overall on the production and consumption of natural resources than in the Bric nations.

The Brazilian and Russian markets in particular are dominated by commodity producers which export in massive volumes to China. (article continues below)

Of the Next-11 countries, although Indonesia, Nigeria and Iran are major commodity producers, other large markets such as Mexico and South Korea are more diversified.

Zafari says the fund can if necessary adopt a zero weighting in more politically risky and less liquid regions such as Iran and will hold 70-75% in core countries such as Korea, Mexico, Indonesia, Turkey and the Philippines.

The fund will deal weekly, allowing greater flexibility to take less liquid positions, which will have a minimum market capitalisation of $200m (£130m).

The fund has a minimum investment of £10,000 and will open to intermediaries at the beginning of the fourth quarter of the year.