Progressive - Frontier Markets FOFs

Long term opportunities from Frontier Markets (from CityWire.com)
00:01:00 27 May 2009
At a time when the focus is on short-term news and what it means for economic prospects, it is worthwhile stepping back to look at depressed assets where the investment case is unashamedly built on a long-term story.
While emerging markets have recovered in recent weeks, the performance of frontier markets has been more mixed. One of the best ways of getting exposure is through the Advance Frontier Markets fund (AFMF), which holds an actively managed portfolio of funds invested in the world’s least developed economies.
In some ways investing in Advance Frontier Markets Fund is analogous to investing in Templeton Emerging Markets Inv (TEM) (Temit) in its early days. June 2009 is the 20th anniversary of Temit’s launch, and over that time emerging markets have moved a long way from the esoteric end of the investment spectrum.
Despite big setbacks such as the Russian debt crisis and the Asian currency crisis, those investors who backed Temit at launch have seen a 10-fold increase in the value of their investment.
The legacy of the current crisis in the world economy is likely to be a prolonged period of subdued growth, an environment in which few funds are likely to replicate Temit’s success. However, the growth potential of the world’s least developed economies affords AFMF a much better chance of emulating Temit over the next two decades.
AFMF is managed by Progressive, a fund of funds specialist with a particular expertise in emerging markets. Progressive launched AFMF to provide exposure to the world’s least developed economies, such as those in Africa, the smaller Asian nations and countries in the Middle East.
Launched in 2007, AFMF initially withstood the onset of the credit crunch. However, the intensification of the crisis last summer led to a sudden withdrawal of liquidity from frontier markets, and AFMF’s net asset value dropped sharply. The share price decline was aggravated by the loss of its premium rating and move to a large discount.
AFMF’s portfolio is comprised of investments in over 20 funds. While a few may be familiar to investors, such as the Investec Africa fund, most reflect the diligent work of the Progressive team in finding specialist managers working in the countries in which they are invested. For example, none but the most determined investor is likely to have discovered the Avaron Balkan fund or the IMARA Zimbabwe fund.
Therefore AFMF represents an excellent way of having a diversified play on less developed countries with strong potential.