While there have been a number of frontier fund launches in recent years, many have failed to live up to the hype.
It has been a difficult time for equity markets in general over the last five years or so, and those in Africa, south-east Asia and the Middle East are no exception.
However, Price’s Fidelity Emerging Europe Middle East & Africa has weathered the storm, delivering 27.5 per cent since its launch in January 2008 – just a matter of months before the Lehman crash. Over the same period, its MSCI EM EMEA benchmark has lost 2.58 per cent.
The only two funds that have been around as long as Price’s portfolio – JPM Emerging Middle East Africa and Charlemagne Magna Africa – are down 15.82 and 23.8 per cent respectively.
Performance of fund vs index since launch
Source: FE Analytics
Over a three-year period, the portfolio has delivered in excess of 50 per cent compared with the index’s 43.02 per cent. Again, no frontier-focused fund has returned more.
Many of the Fidelity fund’s rivals have not only struggled in the total return stakes, but also against their respective benchmarks.
All four pure African equity funds are down versus the MSCI Emerging Frontier Markets Africa index since their launch, for example.
Price’s portfolio is also the cheapest of all the frontier funds in the IMA universe, with a total expense ratio (TER) of 1.74 per cent.
This compares with 2.61 per cent from Dr Mark Mobius’ Templeton Frontier Markets fund, 2.5 per cent from Neptune Africa and 2.7 per cent from the Baring MENA portfolio.
Price says that keeping an eye on corporate governance issues is the key to successful management in developing nations.
"Our philosophy is returns through business, not through markets," he said. "When people think of emerging nations, they think of high growth figures, but there’s a big difference between GDP growth and returns."
"Growth in itself isn’t necessarily a reason to invest in equities – you need good businesses as well."
The manager points to the fact that high-growth regions have made heavy losses in recent years, while those with lower growth but more of an emphasis on corporate governance have done better.
"Issues such as capital discipline, dividend policy, strategic management capability and corporate governance are becoming increasingly important for investors in emerging markets in the post-credit crunch world," he continued.
"Indeed, this is demonstrated by the fact that South Africa has significantly outperformed other large emerging markets over the last four years despite more moderate economic growth."
While it is not officially a frontier market, South Africa currently has a 51 per cent weighting in Price’s portfolio.
However, this position gives him indirect exposure to the high-growth stories in other African nations, with less risk.
"I still believe the structural growth opportunity in sub-Saharan Africa remains underappreciated by most investors," he explained.
"The continent is benefiting from rapid industrialisation and has the ability to deliver fast growth rates from a low base."
"South Africa provides an ideal gateway to access this vast sub-Saharan Africa growth potential, from both a geographic and corporate governance perspective."
"Consumer companies such as Shoprite, Mr Price and Tiger Brands have all built out their South African footholds to establish a broader African distribution footprint."
"Telecom firms MTN and Vodacom have also extended their networks into other African countries, benefiting from the rapid uptake of mobile telephony."
Price also holds UK-listed brewery Sabmiller, which is a distributor of alcoholic drinks around the world – including 31 countries in Africa. It is a top-10 holding in the portfolio, with a weighting of 3.4 per cent.
Fidelity Emerging Europe Middle East & Africa is one of only two headed up by an FE Alpha Manager – the other being CF JM Finn Africa – and has £98m assets under management (AUM). It has a minimum investment of £1,000.
In a recent interview with FE Trustnet, JOHCM’s James Syme tipped Africa as his outside bet for the best performing regional market of the next 10 years.