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Good rationale for Baring Mena

Baring Asset Management – Mena Fund

Type: Offshore Oeic

Aim: Growth by investing mainly in equities in the Middle East and North Africa

Minimum investment: Lump sum £2,500, $5,000 , euro 3,500

Investment split: At least 70% in equities and equity-related securities in the Mena region, up to 30% in emerging market equities and equity-related securities outside the Mena region

Place of registration: Dublin

Charges: Initial 5%, annual 1.5%

Commission:  Initial 3%, renewal 0.5%

Tel: 0845 082 2479

Baring Asset Management’s Mena fund will focus mainly on equities in the Middle East and North Africa. It comprises 20 to 50 stocks selected through a bottom-up growth at a reasonable price investment strategy.

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. It will be benchmarked against the MSCI Arabian Markets ex Saudi Arabia index, but will have exposure to Saudi Arabia through derivatives because the region’s equity markets are not open to foreign investors.

Albany Financial Consultants financial consultant Kelvin Lilywhite thinks this fund is a good idea, with a good rationale behind it. Looking at how it could be useful to advisers and their clients, he says: “There are a lot of very good general emerging markets funds but very few that give access to the Mena region in particular. This fund clearly will not be for everyone, but it could be very attractive for those that want to invest in the region.

Assessing the product literature, Lilywhite likes the content in terms of the background information provided about the region and Barings’ investment history in the area. He points out that the literature contains technical data but feels it is clearly worded.

Turning to the less attractive aspects of the fund, Lilywhite says: “As well as investing in a higher risk area the portfolio is also expecting to hold between 20-50 stocks.” He thinks that this level of concentration could lead to some significant upsides, but warns that it could also exacerbate downsides and increase overall volatility.

Discussing the potential competition Barings could face with this fund, Lilywhite says: “Very few mainstream funds will compete with this, as it is a niche fund. If it performs well and is widely promoted, it could easily become a leader in its sector.”

BROKER RATINGS

 Suitability to market: Good

Investment strategy: Good

Charges: Average

Adviser remuneration: Average

 Overall 7/10

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