Aberdeen Frontier Markets – Incentivised to perform
Mark Gordon-James, manager of Aberdeen Frontier Markets (AFMC), has made a material personal investment in the trust, and therefore has shared in the pain experienced by AFMC’s shareholders as the fund has underperformed a falling benchmark. He is, however, convinced of the fundamental attractions of the stocks in AFMC’s portfolio and believes that these will, in time, be reflected in AFMC’s NAV returns.
The board has introduced a performance-driven exit opportunity which will allow shareholders to exit the trust at a price close to NAV if AFMC’s share price total return fails to exceed the return on its benchmark over the two years ending 30 June 2020, which we consider a strong incentive to improve relative returns and narrow the discount.
The portfolio offers a quality-tilted, diversified portfolio across more than twenty frontier markets, and trades at an attractive single digit price-to-earnings multiple.
Direct investment in frontier markets
AFMC aims to generate long-term capital growth, primarily from investment in equity and equity-related securities of companies listed in, or operating in, frontier markets. Frontier market countries may include countries within the MSCI Frontier Markets Index or other countries that the investment manager deems to be frontier markets due to their characteristics.