Somerset Capital Management, a specialist global emerging markets investment firm, has established the MI Somerset Emerging Markets Discovery Fund. It will target small and mid-cap companies that operate in emerging markets, officially launching 30th October 2019.
Domiciled in the UK, the new UCITS fund will give investors exposure to the team behind the Somerset Emerging Markets Small Cap Strategy, which has been headed up by Mark Asquith since 2008 and has achieved annualised net excess returns of 3.01%.
Asquith, the lead manager of the MI Somerset EM Small Cap and EM Discovery funds, said: “We believe there is potentially a triple opportunity here: 1) emerging markets are cheap and under-owned; 2) within emerging markets, small and mid-caps have suffered their most prolonged period of underperformance versus large caps since the 1990s; and 3) this fund is skewed towards cheaper areas of the market such as EMEA and Latin America, rather than Asia which dominates the benchmark.”
Asquith believes that EM small- and mid-caps have significant structural advantages over large caps. They naturally have more growth potential, tend to be more domestically exposed and have much lower analyst coverage, which makes them a sweet spot for stock pickers, he explained. “The fact that they are approaching their cheapest levels relative to large caps since 2009 is an added bonus.”