Aberdeen Frontier Markets – No closet-tracker –
In a major shift in how its structured, Aberdeen Frontier Markets (AFMC) last year moved from investing indirectly via funds to investing directly into shares of listed companies. This was mostly completed by the end of June 2017. AFMC has underperformed the MSCI Frontier Markets Index by some margin and this, in turn, has led to a widening discount. However, AFMC is not and does not want to be seen as a closet index-tracker. The manager believes its focus on quality will be rewarded in the long run.
This report looks at the MSCI Frontier Markets Index and why it isn’t the perfect tool for analysing AFMC’s performance. It also explains how the manager’s investment approach leads it to construct a portfolio that is very different from the index
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 additional countries that the investment manager believes to be frontier markets in character.
AFMC : Aberdeen Frontier Markets – No closet-tracker