The new fund aims for total returns comprising growth and income by investing mainly in the equities of companies based in the Middle East and North Africa, or those based elsewhere, which derive a big part of their income from these regions. Amr Seif and his colleagues at Investec’s frontier markets investment team will manage the fund.
Seif joined from JPMorgan last December after 10 years at JPMorgan Asset Management, where he specialised in Egypt and Turkey. He managed $1.5bn in Middle Eastern and Central European funds and co-managed over £3.5bn in other emerging Europe portfolios.
Investec launched the fund because it believes there is a strong investment case for the Mena regions and that there is investor demand for Mena funds that show a low correlation with developed markets. It says Mena countries have been liberalising their economies, privatising and deregulating while accumulating wealth that has been driven by high commodity prices.
It also believes that as Mena markets are still under-researched and inefficient, individual stocks are valued attractively relative to their growth potential and the risk profiles of these markets.
Fund managers are starting to explore opportunities in the Mena markets due to several promising factors such as strong economic growth, increased infrastructure spending and expectations that the price of oil will remain strong. While these could produce attractive returns for investors, these markets are not without risks such as a lack of liquidity and political risk.
However, investors who can tolerate such risks may draw comfort from Investec’s experience in these markets.