Frontier Markets Fund Launch

Filed in archive Hedgetalk on July 14, 2008

© Dredrk.

Using a different approach to the hedge fund market, a Copenhagen fund has launched DanFonds 'Frontier markets hedge fund', a hybrid between the public market hedge fund approach and the private equity model.

In a press call with Alex Akesson on Friday, CEO of DanFonds, Daniel Broby, referred to 'peak oil', and the 'commodity super cycle' and also how the writing off of debt by the Paris club has opened the market for frontier funds.

"What we are seeing is generational change; the industrialisation of the final countries that had been left behind." Broby said, "These are not markets for the faint hearted. They are corrupt, illiquid and difficult to access. On the other hand, that is compensated for by the risk premium and the expected returns."

With a philosophy of 'Globalisation is just an extension of industrialisation' and that 'frontier markets are the next emerging markets', their website says that frontier markets are at the very edge of the investable public securities universe.

However, there is potential for high return. With a combined market capitalisation of around $1.7 trillion, frontier markets are in the early stages of development and growing towards entry into the emerging markets indices.

"You either believe in the opportunity or you do not. We don't try to convince investors. We mearly structure the best way to capture that opportunity." Broby concluded.

More at; DanFonds Launches Frontier Hedge Funds