Short positions... investing on the frontier

⬛ “Frontier markets are a risky, niche proposition and not for everybody,” says Dave Baxter in Investors’ Chronicle. An investment in these economies – countries that for one reason or another don’t yet qualify for the emergingmarket indices – may appeal to investors who “see the appeal of younger markets with their own secular growth story” and they “can at times power ahead when their ‘emerging’ counterparts struggle”. But be aware that frontier funds tend to “come with their own idiosyncrasies”. A dedicated frontier fund is often dominated by Vietnam, which makes up 30% of the MSCI Frontier Markets index, and also tends to feature “high levels of stock concentration”. Some funds respond to this by widening their mandate. BlackRock Frontiers Investment Trust has just 8.9% in Vietnam. Its two largest positions are Saudi Arabia and Indonesia, which are part of the MSCI Emerging Markets, not the MSCI Frontier Markets.

⬛ Schroders’ non-voting shares soared by almost 30% on Tuesday after the fund manager’s founding family agreed to abolish its dual-class share structure, says Citywire. Schroders’ non-voting shares normally trade at a large discount to the ordinary shares: on Monday, the non-voting shares closed at 1,870p, while the ordinary shares closed at 2,980p. The two classes will be merged, subject to 75% of holders of each class voting in favour of the change, with holders of the ordinary shares receiving a bonus issue of three shares for every 17 held to compensate them for the dilution of their rights. The Schroder family holds 48% of the ordinary shares (as well as 20% of the non-voting shares) giving them effective control of the company. After the restructuring, they will hold 43% of the merged shares.