Evli Emerging Frontier

Equity fund investing in rapidly growing developing economies

NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
173.807 15.64 46.49 9.93 12.49 11.41
NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
222.203 15.64 46.49 9.93 12.49 11.41
NAV
25.02.2021
Return %
Year-To-Date
Return %
1 y
Return % p.a.
3 y
Return % p.a.
5 y
Return % p.a.
Since start
154.771 17.77 51.58 11.89 - 10.46

Risk

6/7

Morningstar

3/5

Recommended Investment Horizon

9 years or more

Administrative fees

1.90 % p.a.

+ a daily determined performance fee of 20% of the return that exceeds 8% p.a., which is used as a reference return, applying the High Water Mark principle for a minimum period of 24 months.


Suitable for investors

  • investors who wish to benefit from economic growth in the emerging economies
  • investors who wish to benefit from the world’s fastest growing consumer markets
  • investors who seek high returns and can tolerate the risks associated with the emerging markets
  • as a part of a diversified investment portfolio due to the high risk level
  • who want to invest responsibly and take into account not only economic analysis but also environmental, social and good governance (ESG) factors.

Invest

min. 1 000 € or 50 €/month

Investment Policy

Evli Emerging Frontier Fund is an equity fund that invests its assets in the equities and equity-linked securities of companies operating in the emerging markets and in the frontier markets of the emerging economies. The fund’s geographical investment coverage consists of emerging economies or markets in Asia, Africa, Central Asia, the Middle East and Latin America. The fund may invest in derivatives contracts both for hedging purposes and as part of its investment strategy.

The fund’s investment strategy is active and is based on stock selection. Investments are made in consumer-focused companies with growing cash flow and low market valuations.

The strategy’s target markets are generally less known and less accessible for investors, while their economic growth is forecast to outperform that of the developed economies. This offers investors good diversification and an opportunity for high return.

Responsibility

ESG factors are integrated into the fund’s investment decisions, and portfolio managers meet with the management of the investment before making an investment decision. In addition to Evli's general exclusion practices, the fund excludes alcohol and weapons manufacturers, gambling companies and companies mining, extracting and drilling fossil fuels from its investments.

 

The portfolio is managed by

Evli Fund Management Company

Investment Objective and Risks

The fund’s investment activities are aimed at maximizing the increase in the value of assets. The fund does not have an official benchmark index.

As the fund’s return expectation and risk level are high, we recommend the fund to experienced investors with long investment horizons. All the fund’s assets are invested in emerging economies’ equity markets, which means that the fund’s value may fluctuate abruptly within a short period as a result of the general performance of the target markets and exchange rate fluctuations. To minimize the fund’s risks, its investments are diversified extensively on a geographical basis and across different industries.

Monthly review

31.01.2021

Our fund returned 8.4% in January, while the average emerging market index was flat. This strong performance is attributed to our stock selection: 14 of our 31 companies produced returns greater than 10% (only 3 were down more than 10%), while the stock index of Malaysia where half of those winners came from was down -2%.

In early January, after a stock price pullback that wasn’t caused by any changes in highly positive fundamentals, we increased our position in a Malaysian property development company which is a sister company to another portfolio holding, a renewable energy contractor. The company’s chairman had purchased the obscure publicly listed business in 2019 and brought onboard an experienced management team with vast business networks in Asia and the Middle East. New leadership at the helm rebranded and fully revamped the business from the get-go, strongly expanding the order book, executing new projects in Malaysia, Oman and Qatar, and growing earnings over 100% in the last several quarters. What happened to the stock after our additional investment can be described as “leapfrogging”: in just two weeks, its price rose 140%. Given that our investment has performed so well so fast and is now less misunderstood by the market, the risk-return profile became less favorable, so we already scaled the position back.

In January we witnessed a market-wide sell-off in Vietnam, which happened after nearly six months of consistent growth. The coincidence of several factors – market’s fears that the rally is overdone, uncertainty regarding the US trade policy as it pertains to China and consequentially to Vietnam, rumors that retail investors are over-stretched on their levered equity positions, and first-in-two-months locally transmitted Covid-19 cases – led to a short-lived panic. We were not concerned: our Vietnamese holdings are still cheap, high-quality, and growing strongly. For instance, our 14x PE IT distributor grew earnings over 60% in Q4, while the 10x P/E financial services firm grew theirs over 800%. Now the valuations have only gotten more attractive for further position increases.

Fund facts

Type of fund Equity fund investing in emerging markets (UCITS)
Investment activity began 08.10.2013
Benchmark index No official benchmark index
Profit distribution Fund-units are divided into A and B units. Profit share of at least 4% is distributed on A units annually.

Downloadable files

Invest

min. 1 000 € or 50 €/month