The fund is expected to contain 20 to 50 stocks selected through a bottom-up growth at a reasonable price investment strategy. At least 70 per cent of the portfolio will be invested in the Mena region, with up to 30 per cent invested in other emerging markets
The fund will be benchmarked against the MSCI Arabian Markets ex Saudi Arabia index, but it will have exposure to Saudi Arabia through derivatives. This is because the region’s equity market is not open to foreign investors. Countries such as Egypt, the United Arab Emirates, Qatar and Turkey will also feature.
The fund will be managed by the London-based head of Barings’ emerging Europe, Middle East and Africa equity team, Dr Ghadir Abu Leil-Cooper. She is lead manager on the Baring Eastern Europe and Baring Russia funds, and co-manages Baring Emerging Europe.
Leil-Cooper joined Barings as part of the Global Emerging e quity team in 1997. She previously worked at BZW Asset Management as an investment analyst focusing on the Middle East, North Africa and Latin America.
Leil-Cooper likes the consumer, industrial, infrastructure and healthcare sectors and is likely to invest heavily in financials, as it is the biggest sector in the Mena region. She is interested in banking due to the growth potential in mortgage and insurance products, as well as Islamic and investment banking
Barings believes the Mena region provide good investment opportunities due to its young and growing population, a commitment to develop its infrastructure and an economy that is rich in resources. It also says that recent volatility in the region means now could be a good time to take advantage of low valuations within equity markets that are in the early stages of development.
However, high political risk, the immaturity of the region’s equity markets and their volatility make the fund high-risk relative to other emerging markets.