AFC Asia Frontier Fund Investment Strategy
The AFC Asia Frontier Fund is designed to offer investors high returns which have a lower correlation with global and emerging markets and provide a significant diversification opportunity. The fund universe consists of Asia frontier countries which exhibit favourable demographics combined with rising incomes and high GDP growth rates. Due to the structural changes taking place in these economies, the fund invests in listed equities of companies that have their principal business activities in these high growth Asian frontier countries. The current fund universe consists of Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam.
The fund's investment strategy is a combination of a top-down and bottom-up approach which allows the fund to take advantage of growth and value opportunities. Top down analysis identifies macro trends which could impact industries or companies positively or negatively while bottom up analysis allows the fund to look for companies or industries which are valued attractively relative to their earnings growth, free cash flow and dividend yield.
To take advantage of the growth in these Asian frontier countries, the fund primarily investing in Consumer Staple, Consumer Discretionary, Financial and Infrastructure stocks. Additionally, the fund also invests in country specific sector stocks such as Textiles in Pakistan and Bangladesh, Tourism in Sri Lanka, Natural Resources in Mongolia and Papua New Guinea and Power Generation in Laos.
The fund's investment strategy consists of building a core portfolio of large cap and liquid stocks as well as a satellite portfolio of mid and small cap stocks. One of the fund's key sources of comparative advantages is the focus on capturing returns from small and mid-cap stocks which are often overlooked by larger, less flexible funds.
This investment strategy is backed by a systematic and pro-active research process which involves primary in-house research, on the ground visits and access to credible secondary research resources.