MILWAUKEE, WI--(Marketwired - May 10, 2013) - U.S. investors, for whom it is suitable to allocate a portion of their portfolios to Frontier Market equities, may achieve greater return potential over the long term than if they invest solely in developed markets, advises Dafydd Lewis, CFA, Investment Analyst, Lloyd George Management (LGM).
The boutique asset manager, specializing in Asian Emerging and Frontier Markets investing, is part of BMO Global Asset Management and a member of BMO Financial Group. Lewis delivered this important message to delegates at the 5th Annual Make A Difference - Wisconsin Investment Conference, held earlier this week at the Pfister Hotel in Milwaukee, WI.
Frontier Markets consist of countries with market-oriented economies in the early stages of economic development, reflecting many of the same characteristics of the original Global Emerging Markets -- such as China and India -- some 20 years ago. After conducting nearly 300 meetings last year alone, representing companies from 47 countries, LGM's experienced team of three dedicated Frontier specialists, headed by Senior Portfolio Manager Thomas Vester Nielsen, CFA, continue to be firm believers in the strategic case for investing in Frontier Markets.
According to Lewis, Frontier Markets offer strong growth prospects, driven by favorable demographics and the increasing disposable income of local consumers, while remaining relatively uncorrelated to both Developed and Emerging Markets in the long term. This, Lewis said, makes them potentially attractive from two perspectives: enhanced returns and potentially lower risk levels through diversification in an overall portfolio.
"Frontier Market equities have extremely attractive valuations and offer higher dividend yields than other major markets," explained Lewis. "Meanwhile, less analyst coverage means companies are often 'under researched.' This inefficiency creates considerable opportunities for analysts willing to roll up their sleeves and do their own bottom-up research which, in turn, provides institutional investors with significant untapped investing opportunities."
As with investments of any type, potential investors should do their due diligence by researching the risks of Frontier Market equities. Specifically:
- Political climate can range from mixed to turbulent. By diversifying across sectors, countries and regions, investors may mitigate some of this risk.
- Fraud is an ongoing concern but can be best managed through company visits and by focusing on companies that are audited regularly by internationally recognized firms.
- Liquidity considerations also need to be taken into account, as it can take longer to invest in and divest from Frontier Market companies.
- Investors should seek the advice of Frontier Market experts who have the resources available to conduct the due diligence necessary to invest in these countries. Unlike at many other firms, LGM's Frontier Markets team is dedicated to the strategy, which is not simply a carve-out of the firm's GEM strategy.
BMO Financial Group is a Premier Sponsor of 5th Annual Make A Difference - Wisconsin Investment Conference (www.makeadifferencewisconsin.org), which brings together investment and finance professionals and individual investors in the Midwest to share top investment ideas and perspectives.
For more information, visit: http://www.bmo.com/gamus/about-us/content/bmoglobal/network/lloyd-george.
About Lloyd George Management
Established in 1991, Lloyd George Management is a specialist Asian, Global Emerging and Frontier Markets equity manager with $2.4 billion in assets under management (as of March 31, 2013). Its team of 25 investment professionals is based in offices in Hong Kong, London and Mumbai. Lloyd George Management's approach is active and primarily stock driven, with a focus on high quality sustainable growth companies with strong capital management. It seeks investment opportunities across the market cap spectrum. In April 2011, Lloyd George Management became a wholly owned subsidiary within BMO Financial Group.
About BMO Global Asset Management
BMO Global Asset Management is a global investment manager with more than $125 billion in assets under management as of January 31, 2013, including discretionary and non-discretionary assets under management.
Our two multi-disciplined teams are based in Toronto and Chicago/Milwaukee, and our network of world-class boutique managers is strategically located across the globe. They include Monegy, Inc., Pyrford International Ltd., Lloyd George Management and Taplin, Canida & Habacht, LLC. BMO Global Asset Management delivers service excellence from offices throughout North America, and in London, Abu Dhabi, Mumbai, Beijing, Shanghai and Hong Kong. Our approach has led us to be recognized by Pension & Investments as one of the world's largest 100 asset managers based on combined assets under management as of December 31, 2011.
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