BlackRock plans to launch a frontier market-focused investment trust, managed by Sam Vecht.
Vecht joined the BlackRock emerging markets team 10 years ago. In April 2009 he became the lead manager on the Luxembourg-domiciled BlackRock Emerging Europe fund.
The new fund – expected to be named the BlackRock Frontiers investment trust – will focus on the Middle East and Africa. (article continues below)
It is expected to be concentrated on telecom, banking and utility names, which tend to dominate frontier market stockmarkets. It will offer a yield of 3% at launch.
Frontier markets have attracted increased fund flows as investors have recovered their appetite for risk. Investors are attracted by the higher growth rates on offer and that stock market capitalisation to GDP ratios tend to be lower, giving scope for faster stock market growth.
BlackRock declined to comment on the plans.
The MSCI Frontier market index is down 15.38% over three years, though many active managers argue indices are often a poor reflection of the opportunity set in frontier markets, tending to be dominated by banks. Over the same period, the MSCI world index is down 10.91% and the MSCI EM Bric index is down 6.15%.
Vecht’s tenure on the Emerging Europe fund has delivered strong early performance.
The fund is 3.9 percentage points ahead of its Equity – Emerging Europe peer group over one year.