Mutual fund managers are expanding emerging markets borders—looking to invest in such exotic locales as Vietnam, Malaysia, Indonesia, Bulgaria, Peru, Panama, Bolivia and Botswana, MarketWatch reports.
Setting aside the difficulties of volatile, small markets where liquidity is very thin, managers are finding untapped opportunities.
One company to launch such a fund is Franklin Templeton Investments, with its Templeton Emerging Markets Small Cap Fund.
“One of the things we were getting from our customers was, ‘Why aren’t you in Estonia? Why aren’t you in Romania or Vietnam?’” said Mark Mobius, lead manager of the new Franklin Templeton fund. “So, we did inquiries about that, and the answer was they do very little trading.”
Although the firm has a database of 17,000 companies in emerging-markets nations, its set criteria for size, market cap and liquidity limited that number to 3,000. Once Mobius and his team loosened those restrictions, they found “a number of opportunities, bargains we couldn’t expose ourselves to, so we decided to start a small-cap fund.”
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