In the midst of the current bear market, two Canadian companies are launching mutual funds next Monday that will invest in the frontier emerging markets of Africa and the Middle East.
Mackenzie Financial Corp. is marketing Mackenzie Universal Africa & Middle East Class, while Franklin Templeton Investments Corp. has the Franklin MENA Fund.
It is impossible to foresee whether stock markets will go lower, but "the entry point" in the region now will make sense over the longer term, suggested David Feather, president of the fund arm of Mackenzie Financial.
The region's markets are appealing because they have a low correlation to global capital markets, including emerging markets, Mr. Feather said yesterday. "Africa and the Middle East are dominated by local money rather than global capital flows."
Unlike the Mackenzie fund, which will invest in all of Africa and the Middle East, the Franklin Templeton fund focuses on securities of 12 countries in the Middle East and North Africa, or the so-called "MENA" countries.
While people assume the MENA region is an oil and gas play, that is not the case for the Franklin Templeton fund, said Stephen Fiorelli, vice-president of marketing strategy for Franklin Templeton.
The manager sees opportunities in real estate and construction, logistics and transportation, fertilizers and financials, Mr. Fiorelli said.
That fund will be run by Dubai-based Algebra Capital, which is 25-per-cent owned by Franklin Templeton's parent. The Mackenzie fund will be run by Investec Asset Management based in Johannesburg.
Independent fund analyst Dan Hallett acknowledged that it "could be an interesting time" now to invest in these regions for those who believe they have long-term growth potential.
But it's tough for many investors to do so given that they have seen emerging indexes plunge about 65 per cent from last fall's peak to the recent trough, Mr. Hallett said.
© 2007 The Globe and Mail. All rights reserved.
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