Our target asset classes cover a considerable part of the world and contain a large percentage of the world’s endowment of both natural and human resources.
MSCI, a leading provider of global index data, currently includes 23 markets in its emerging markets index, with those markets representing approximately 11% of world stock market capitalisation. Key constituents include the “BRICs” (Brazil, Russia, India and China) as well as the likes of Mexico, Chile, South Africa, Turkey, Indonesia, Malaysia, Taiwan and Thailand.
Within frontier markets, MSCI includes 24 countries with a focus on Africa and the Middle East. Key constituents include Kuwait, Lebanon, Nigeria, Morocco, Kenya, Argentina, Pakistan, Vietnam, Bangladesh, Kazakhstan and Romania. Aberdeen Emerging Capital’s definition of frontier goes beyond that of MSCI’s to include markets such as Ghana, Senegal, Zambia, Zimbabwe and Iraq, where stock exchanges exist but which do not yet satisfy MSCI’s criteria for inclusion. In total, we estimate the total number of investable frontier markets to be in the region of 50.
Emerging and frontier markets are categorised as such by index providers on account of their generally lower levels of economic development, size, liquidity and market accessibility relative to the developed markets such as the United States, United Kingdom and Japan.
Despite the challenges that inevitably arise as a result of the lower levels of development in these countries, emerging markets have historically compensated investors with higher aggregate returns as well as significant diversification benefits when incorporated into global equity portfolios. The Aberdeen Emerging Capital Investment Team believes that this will continue to be the case in the future, with this view supported by favorable trends in economic development, consumption patterns and demographics.