BlackRock unveils Frontiers investment trust

BlackRock’s new Frontiers investment trust will have large a exposure to the Middle East and Africa, but limited holdings in Asia and Latin America.

Numis analyst Charles Cade says BlackRock has begun marketing the trust, which will be run by Sam Vecht, head of the group's Emerging Europe, Middle East and Africa equity team.

At launch the portfolio is likely to be split 36% in the Middle East, 23% in Africa, 30% in emerging Europe, 7% in Latin America and 4% in Asia. It is due to start trading in early December.

The AMC is 1.1% with a performance fee of 10% of NAV returns in excess of the MSCI Frontier Markets index, capped at 2.5% of assets.

The fund is expected to yield at least 3% per annum and there will be a full tender at NAV less costs after five years.

Cade says: "These smaller markets have lagged behind the BRICS in the liquidity driven rally since early 2009 and as a result they are now trading more cheaply despite benefitting from a strong secular growth story.

"Frontier markets are experiencing rapid GDP growth, have a Iow debt burden and typically have a low correlation to both developed and other emerging markets."