Baring Asset Management is to convert the ailing Baring Pacific fund into the Baring Asean Frontiers fund in a bid to capture opportunities in smaller, faster-growing markets in Asia.
This year to date, the Pacific fund returned -16.3% ($) and -22.3% (€), hit by local inflationary pressures and lack of exposure to Japan. The fund’s benchmark, the MSCI AC Asia Pacific index, fell 12.2% ($) and 18.5% (€). With an objective of long-term growth, the fund invests in the Pacific and Pacific Rim region.
Barings says 80% of the Asean (Association of South-East Asian Nations) Frontiers fund will be invested in core Asean markets: Singapore, Malaysia, Indonesia, Thailand and the Philippines, while 10% will be invested in frontier markets such as India, Vietnam and Sri Lanka. The remaining 10% will have exposure to Greater China.
Managed by SooHai Lim, the fund will use a ‘growth at a reasonable price’ investment philosophy. The number of fund holdings is expected to remain at about 40 to 50. It will be an Irish-domiciled Oeic and use the MSCI South East Asia index as a benchmark.
More than a decade after the Asian financial crisis of 1997, Lim believes that with restructured balance sheets, reined-in deficits and rising local currencies, “Asia’s tigers are ready to pounce again”.
“In our view, some of the markets with the greatest growth potential can be found among the members of Asean, in countries such as Singapore, Malaysia, and the Philippines,” he added.
“With a total population base of over 550 million, and a combination of rich natural resources and world-class business expertise, we expect the major Asean economies to deliver superior GDP growth rates well into the medium to long term, leading to a robust earnings environment for individual markets.”
The annual management fee for the Baring Asean Frontiers fund will be 1.25% for Class A and 0.75% for Class I. Minimum investment will be $5,000 or £2,500 for Class A and $50,000,000 or £25,000,000 for Class I.
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