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Frontier Markets
Jan Bloomberg
Posted: 21 May 2018 12:41:28(UTC)
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Just wondering if there is any recommended ITs that deal with Frontier Markets? I'm already in VOF (recently) but its a long term hold, looking for some others having just sold by BAE shares after 12 months of them doing absolutely nothing interesting.

Looking to split some cash into two racier items with a long term view, maybe Kenya/Sri Lanka or Romania

Any recs?
Alan Selwood
Posted: 21 May 2018 14:01:53(UTC)
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There is also VEIL for Vietnam.
For a more general spread, you could consider BlackRock Frontiers Investment Trust.
2 users thanked Alan Selwood for this post.
Jan Bloomberg on 21/05/2018(UTC), nigel morris on 21/05/2018(UTC)
Jan Bloomberg
Posted: 21 May 2018 14:11:24(UTC)
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I've been looking at BlackRock that but its appears to be a bit hit and miss. Certainly good over the 5yr period but less so over the last 12-18 months.

VEIL is interesting, it is tempting to drop some coin in there as well but two in Vietnam - I wonder how much crossover there is.
Alan Selwood
Posted: 21 May 2018 14:24:15(UTC)
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You can study the portfolio composition of each to find out. You may find that there is more differentiation than you might expect.

JP Morgan Emerging Markets and Genesis have been the subject of favourable comments in the past, but whether they have enough 'Frontier' rather than 'Emerging' may be another matter.
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Jan Bloomberg on 21/05/2018(UTC)
David JP
Posted: 21 May 2018 17:14:57(UTC)
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In addition to Blackrock Frontiers (BRFI), there is the just about one year old Jupiter Emerging and Frontier Income trust (JEFI). I think it has a limit of up to 25% investment in frontier markets, and has a fairly pronounced China/Taiwan tilt.

JEFI goes xd after this Wednesday (23rd May) in relation to its 2p dividend due in June.

BRFI goes xd the following week in relation to its 3 US cents dividend.

For the record I hold both as (hopefully) long-term income diversifiers.

There is at least one frontier market ETF (XSFR) but I ruled it out as it was not a dividend payer and at the time of investigation seemed too concentrated in Kuwait for my liking.
4 users thanked David JP for this post.
Richard_L on 21/05/2018(UTC), Dian on 22/05/2018(UTC), Jan Bloomberg on 22/05/2018(UTC), martin hargan on 24/05/2018(UTC)
Dian
Posted: 22 May 2018 08:43:31(UTC)
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Jan Bloomberg;62574 wrote:
Just wondering if there is any recommended ITs that deal with Frontier Markets? I'm already in VOF (recently) but its a long term hold, looking for some others having just sold by BAE shares after 12 months of them doing absolutely nothing interesting.

Looking to split some cash into two racier items with a long term view, maybe Kenya/Sri Lanka or Romania

Any recs?


If I am right for investors looking to gain exposure to Sri Lanka and Kenya via ETFs, current options are somewhat constrained. Therefore, I pick promising sectors in each country like food and agriculture and banking sectors and then trying to pick the best companies in those sectors. I prefer companies with strong balance sheet.

Promising companies in Kenya

Kakuzi(KAZU)
Ten years ago, this diversified agricultural producer was exposure to heavy debt But over the past decade, company invested heavily in lucrative new crops like avocado and macadamia nuts.Management also sold off one of its tea plantations and retired the company’s interest-bearing debt. The combined impact of all these factors has been consistent profitability. Kakuzi’s cash flow and balance sheet are in a good position. So they can develop their business while continuing its forthcoming strategic investments like before. KAZU-KE currently does not have any debt.

https://www.reuters.com/...stocks/overview/KUKZ.NR
http://www.rich.co.ke/me...t%20December%202017.pdf

Diamond Trust Bank(DTQL)
Diamond Trust is arguably Kenya’s best-managed bank. It has increased its branch network from just five in 2005 to well over 100 today and extended its reach beyond its Kenyan home base to Burundi, Tanzania, and Uganda. So, far it looks like the moves are paying off. Customer deposits have increased in excess of 20% in each of the past five years. Its return on equity currently and over the past five years suggest that its relatively high operating returns are sustainable.

Centum(ICDC)
It now boasts controlling stakes in firms active in consumer goods, manufacturing, banking, and real estate. Its return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable and doesn’t have any debt.

Promising companies in Sri-Lanka

Bairaha (BFL)
Bairaha is one of the industry’s most highly-integrated poultry producers and has a strong presence in the processed foods market segment. It is affiliated with Cobb-Vantress Inc. (Cobb) USA, one of the oldest poultry breeding companies globally and a subsidiary of Tyson Foods, Inc. USA, one of the world’s largest processers and marketers of chicken. It is one company which is going to benefit from the tourism growth and Population growth. It sold off unsuccessful projects and invested in growing areas during last 15 years. For example it launched a project in partnership with Hybro B.V. of the Netherlands to operate the country’s most advanced Grand Parent Broiler Breeder farm and hatchery in Sri-Lanka in the past. They make use of their strong cash flow to develop their business and to invest in new projects while being an attractive regular dividend payer. They have a sound balance sheet with good ROE and currently trading at very low PE. In 2011, it was one of the Forbes Asia’s ‘best under a Billion’ list.

https://cdn.cse.lk/cmt/u...file/452_1499168100.pdf


Ceylon Grain Elevator (GRAN)
Ceylon Grain Elevators PLC is mainly engaged in manufacturing and selling poultry feed and other animal feed and a diversified Agri company. As a part of its integrated feed milling activity, the company through its subsidiaries has expanded into the operation of commercial farms, processing & retailing poultry meat products, importing & selling veterinary vaccines, medicines & poultry equipment, operation of hatcheries and commercial production of ornamental fish & shrimp feed. Currently they do some exports as well. Their latest addition to production line is the introduction of customized dairy feed range to the emerging local dairy industry further strengthened it's position as the market leader. It has a strong balance sheet, cash flow and almost debt free company. So they can develop their business while continuing its forthcoming strategic investments or acquisitions like before. It is another company which is going to benefit from the tourism growth and Population growth. Its acquisition of fast growing listed Three Acre Farms (TAFL) in the past has made big difference in their balance sheet.The Group is looking forward to enhance its growth potential through further investments to improve and expand its operation.

https://cdn.cse.lk/cmt/u...e/671_1525947224671.pdf
https://cdn.cse.lk/cmt/u...e/671_1523006281744.pdf

People leasing and Finance (PLC) -banking sector
Growing bank

I hope following links will answer your question.

http://etfdb.com/country/sri-lanka/
http://etfdb.com/country/kenya/
http://etfdb.com/country/romania/
3 users thanked Dian for this post.
AJW on 22/05/2018(UTC), David 111 on 22/05/2018(UTC), Jan Bloomberg on 22/05/2018(UTC)
Jan Bloomberg
Posted: 22 May 2018 13:23:50(UTC)
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David JP;62607 wrote:
In addition to Blackrock Frontiers (BRFI), there is the just about one year old Jupiter Emerging and Frontier Income trust (JEFI). I think it has a limit of up to 25% investment in frontier markets, and has a fairly pronounced China/Taiwan tilt.

JEFI goes xd after this Wednesday (23rd May) in relation to its 2p dividend due in June.



Thanks for this, dropped some in today, looks good for a long term prospective play, 10+ years

Dian
Posted: 22 May 2018 18:14:36(UTC)
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I forgot about Barclays NewGold ETF. Kenya’s bourse admitted its first ever exchange traded Barclays New Gold ETF fund (ETF) in 2017, which was originally listed in South Africa.
colin overton
Posted: 22 May 2018 18:46:19(UTC)
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Is it a good idea to invest in a frontier market, assuming profit is your motive? If you want excitement why not invest in a small mining/oil concern.
If profit is not your motive, perhaps a charity would be best.
Dian
Posted: 26 May 2018 11:33:47(UTC)
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Different funds have allocated more money for different geographical areas. Therefore at different time different funds will outperform others. However well run funds will outperform all others in the long run.

According to the following link, sector wise Black rock has invested mostly in financials followed by real estate, materials, health care, consumer staples and consumer discretionary. It is not exposure to Information technology and utilities much in frontier markets.

http://www.lse.co.uk/reg...adline=Portfolio_Update
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