• Our team offers a strong blend of skills and experience, with a consistent and excellent long-term history of managing African Frontier portfolios
• To ensure success in frontier market investing, managing key risks such as currency devaluation, repatriation and liquidity is essential
• Our process emphasises personal engagements with market participants to develop a detailed understanding of country dynamics and nuances
• Old Mutual as the anchor client provides stability and cost efficiencies

The strategy is benchmarked against the Standard Bank Africa ex South Africa Sovereign Bond Total Return Index and seeks to outperform it by 1% over rolling three-year periods. It currently tracks lightly ahead of the benchmark.

The African Frontiers Flexible Income Strategy emphasises the importance of currency performance and convertibility in driving investment success. Currency risk management is integral to the process, with insights gained through direct country visits and engagement with local market participants, including regulators. This hands-on approach helps develop a deep understanding of local dynamics, beyond desktop analysis. Even in challenging conditions, the strategy identifies profitable opportunities by leveraging expertise and real-world knowledge, making it a critical component of its investment approach.

Our hybrid core-satellite investment strategy combines multiple approaches for optimised returns. The core portfolio primarily consists of Eurobonds, with a focus on sovereign and some corporate bonds, helping to reduce currency risk. A short-duration local currency portfolio adds liquidity and lowers credit risk, while a currency derivative portfolio serves as a yield enhancer. The local currency bond portfolio is driven by active market views, and a structured portfolio hedges local currency opportunities. Additionally, synthetic access provides exposure to markets with limited availability.

• Strong performance relative to benchmark, local as well as international peers, which comes from stock selection, forex analysis and cash management
• Our robust process allows us to assess investment ideas across approximately 16 African countries and currencies
• Currency management is integrated throughout our process
• Old Mutual, as the largest investor in this strategy, is reassuring to investors as returns are unlikely to be impacted by a large withdrawal

The strategy is benchmarked against the MSCI Emerging Frontier Market Africa ex SA Index and focuses on those companies where we have actively engaged with management. Our goal is to create a portfolio that delivers outperformance, builds long-term capital for our clients and with less risk.

Our process focusses on building a portfolio of undervalued stocks with a preference towards stocks paying dividends and stocks generating higher returns. Our research follows a disciplined and structured approach to fundamental analysis to identify and exploit market inefficiencies and extract alpha. Given that the Old Mutual African Frontiers Strategy invests in multiple currencies and countries, we do bespoke analysis to understand country and currency risk to avoid capital loss. We believe that a portfolio manager skilled in controlling overall strategy risk generates enhanced risk-adjusted returns for clients.

Our high-conviction approach filters a universe of 1 000 companies to focus on around 200 shares with liquidity and accessible data. Idea generation combines country and currency analysis, proprietary rankings, sector analysis, and direct company visits. In portfolio construction, we assess upside potential, liquidity, sector/country exposure, and benchmark weighting. Risk management is integral, emphasising liquidity, currency management, and diversification. The goal is to build a portfolio that outperforms the market, growing long-term capital for clients with reduced risk.