Aberdeen Emerging Markets Smaller Companies Investment Trust will invest across 20 different companies, with 15 per cent in Brazil, 10 per cent in Malaysia and 10 per cent in South Africa. It will also have a small exposure to frontier markets, with holdings in Kenya, Jordan and Nigeria, including the Diageo subsidiary East Africa Breweries.
"Nineteen per cent of the trust will be in the consumer discretionary sector, and one company we particularly like is the Brazilian shoe specialist Arezzo. Its designs are very slick, it is operationally sound and has good control of its costs. Some of its products are now in Harvey Nichols," Gordon-Jones said.
The manager, who is running the trust alongside Devan Kaloo, pointed out that smaller companies in emerging markets tend to have more assets under management than Western small caps. The smallest company owned by the trust is $300m Brazilian healthcare group Kremma, while the largest is worth more than $2bn.
"Micro cap is off the cards for us due to corporate governance issues and lack of company maturity," he added.
The manager also pointed to the Philippines-based fast-food chain Jollibee as a strong holding.
"They make a sweet burger in a sweet bun, and also own a Chinese fast-food chain in China and India. The franchise is spreading to America because there is a large Filipino population in California," he said.
The Aberdeen Emerging Markets Smaller Companies trust will invest in a mixture of multinational subsidiaries and domestic companies.
The emerging markets small cap indices tend to have a skew towards technology companies, but Gordon-Jones is avoiding these in his portfolio, saying they are not interesting and rely too heavily on exporting.
Performance of fund vs sector over 4-yrs
Source: Financial Express Analytics
The investment trust’s launch comes on the fourth anniversary of the introduction of offshore fund Aberdeen Global Emerging Market Smaller Companies. This vehicle has returned 47 per cent in this time, compared with an 18 per cent return from its Global Emerging Markets sector.