By Laurence Fletcher
LONDON, Aug 27 (Reuters) - Fund firm Castlestone Management
plans to launch a portfolio investing in emerging markets from
the Philippines to Iran, hoping they will show the same rapid
growth seen in China and India in recent years.
The Next 11 Emerging Markets fund, set to launch around the
start of October, is based on a Goldman Sachs idea of the 11
countries most likely to follow the rapid growth of BRIC
countries Brazil, Russia, India and China.
Around 10 percent of the fund's assets will be invested in
stocks in South Korea; 65 percent in Mexico, Indonesia, Turkey
and the Philippines; 20 to 25 percent in Egypt, Vietnam,
Pakistan and Nigeria; and 5 percent in Bangladesh and Iran, the
fund's manager, Arrash Zafari, told Reuters.
"It gives investors a second shot at a BRIC-like opportunity
at a time when you're not early in getting to the BRIC story
anymore," he said in an interview on Thursday.
"They do have the same fundamental drivers -- very large
populations that are often still growing and getting richer and
whose spending power will be increasingly integrated with the
The launch comes amid positive returns from some of these
'Next-11' markets, even though the MSCI emerging markets index
is down 2 percent this year.
Iran's TEPIX index hit a record high this month, while
Nigeria's all-share index is up 16 percent this year despite
Zafari said that, despite sanctions from the United States,
Europe and the United Nations Security Council, Iran presented a
"jaw-dropping opportunity" with a price/earnings ratio of 6
times and a dividend yield of 15 percent.
"(Iran) is completely overlooked. It's got many of the
attractive secular drivers, such as a large growing middle class
who are active consumers."
He played down concerns about the power wielded by Mexico's
violent drug cartels, one of the factors that led hedge fund
Onslow Capital to short the country's sovereign bonds.
Zafari believes bond market investors need to exercise
caution, but sees avenues to avoid the risk in equities. He
picks Mexican cable TV company Megacable as operating in an area
where the cartels have not encroached.
The fund will be domiciled in the British Virgin Islands and
will have a capacity of around $200 million. Castlestone manages
around $350 million in assets.
(Editing by Michael Shields)
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