Aberdeen Frontier Markets – Incentivised to perform is QuotedData’s latest update note on this frontier markets fund

Mark Gordon-James, manager of Aberdeen Frontier Markets (AFMC), has made a material personal investment in the trust, and therefore has shared in the pain experienced by AFMC’s shareholders as the fund has underperformed a falling benchmark index. He is, however, convinced of the fundamental attractions of the stocks in AFMC’s portfolio and believes that these will, in time, be reflected in AFMC’s NAV returns.

The board has introduced a performance-driven exit opportunity (see page 10) which will allow shareholders to exit the trust at a price close to NAV, if AFMC’s share price total return fails to exceed the return on its benchmark over the two years ending 30 June 2020. On the face of it, this would appear to be a strong incentive to improve relative NAV returns and narrow the discount.

The portfolio is diversified portfolio across more than twenty frontier markets, is biased towards stocks the manager considers to be of high quality, and trades at an attractive single digit price-to-earnings multiple, based on an average of the stocks in the portfolio.

Direct investment in frontier markets

AFMC aims to generate long-term capital growth, primarily from investment in equity and equity-related securities of companies listed in, or operating in, frontier markets. Frontier market countries may include countries within the MSCI Frontier Markets Index or other countries that the investment manager deems to be frontier markets due to their characteristics.

AFMC : Aberdeen Frontier Markets – Incentivised to perform