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PORTFOLIO INSIGHT


The next frontier


It took time, but investors are getting comfortable with hold- ing emerging market equities and debt in their portfolios. After years of being panicked by huge swings in volatility, investors have come to understand that what happens in South Africa has little impact on the fundamentals in Indone- sia, for example. Yet behind them are the frontier markets, which are the next economic region for developed market investors to get to grips with. They have less developed capital markets, are believed to carry too much inherent risk and are considered too illiquid, but growth in some of these economies is predicted to be some of the largest globally. This, along with structural improvements, makes it timely to speak to one frontier equity manager about how he navi- gates risk and picks stocks in countries with little independent analysis.


Issue 87 | October 2019 | portfolio institutional | 23


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