Luxembourg-based VAM has launched a frontier markets equity fund that will be run by Driehaus Capital Management, a boutique US manager.
The VAM Frontier Markets fund will mostly invest in companies that are based or doing business in the 33 MSCI Frontier Market countries. It will buy all sizes of companies and aim to hold between 60 and 90 names.
The Luxembourg-domiciled fund is open to wealth and discretionary managers as well as retail investors through financial advisers.
The Chicago-based Driehaus team, led by Chad Cleaver, follows an earnings growth momentum approach. Cleaver is the lead manager for the firm’s small-cap growth strategy.
Cleaver says the Driehaus EM team has found and invested in greater numbers of “compelling” frontier opportunities.
“These markets maintain remarkable demographics and strong future growth potential,” he explains.
“Many consumer-related industries are at early stages of development and increasing local demand – such as in banking services, retail merchandising, mobile penetration and auto sales – which is a significant driver of growth.”
Meanwhile, the markets’ capitalisations are low in relation to GDP, which means the companies’ valuations are likely to grow.
“Supporting the opportunity is the fact that foreign direct investment is increasing, which provides an additional significant driver of growth within the frontier universe,” he adds.
The OCF is 2.76 per cent and the fund aims to beat the MSCI Frontier Market Index over the long term.