For the six months ended 31 December 2015, Advance Frontier Markets Fund saw a decline in its NAV of 14.7% during what proved to be a disappointing period for investors in frontier markets. The share price fell by 18.1% as the discount at which the Company’s shares trade widened to 10.0%. The MSCI Frontier Markets Net Total Return Index declined by 11.7% over the period while the MSCI Emerging Markets Net Total Return Index declined by 17.4%.
The Board is proposing that the Company’s name be changed to Aberdeen Frontier Markets Investment Company Limited. This will be proposed at an Extraordinary General Meeting of the Company’s shareholders to be held on 14 April 2016.
At the time of the Company’s Annual General Meeting in December 2016, the Board will put proposals to shareholders that will provide them with the opportunity to fully realise their investment in the Company at the then prevailing net asset value less costs. The directors intend to offer shareholders the same opportunity at five yearly intervals thereafter.
The managers say, in terms of relative performance, manager selection was broadly positive with the Company’s investments in Pakistan, Argentina and Vietnam performing strongly. This was partially offset by a number of the Company’s African holdings which lagged their benchmarks. Asset allocation was a negative with exposures to Egypt, Zimbabwe and Saudi Arabia detracting as those markets declined more sharply than the MSCI Frontier Index (of which they are not constituents) while the Company was also underweight the strongly performing markets of Morocco and Argentina. Significant allocations to Vietnam and Romania contributed positively as did an underweight allocation to Nigeria. Discount widening on closed end holdings hampered performance as continued negative sentiment towards the asset class impacted Africa Opportunity Fund, Picic Growth Fund and VinaCapital Vietnam Opportunity Fund.
AFMF : African exposure and discount widening impact Advance Frontier Markets