Silk Road Management, investment management subsidiary of frontier markets investment bank Silk Road Finance, has launched the Silk Road M3 Fund, an investment fund focused on Myanmar, Mongolia and Mozambique.
Silk Road M3 is an open-ended fund seeking to generate positive returns by gaining early exposure to the world’s fastest growing economies.
The fund will primarily invest in equities of internationally listed companies with assets and operations in the three countries as well as high yield fixed income and local currency instruments.
According to Silk Road Management, M3 countries have largely untapped natural resources, and they are both geographically and economically strongly linked with BRICS (Brazil, Russia, India, China and South Africa).
They are all formerly socialist countries and experienced failed central planning economic policies. “Now governments are committed to market economic reforms and attracting foreign investments which would generate strong “catch up” phase in their economic development,” Silk Road said.
The company estimates that Mongolia, Myanmar and Mozambique will be among world’s top five fastest growing economies in the next decade with Mongolia GDP growth at projected 15% per annum while Myanmar and Mozambique expanding annually 12% and 10% respectively.
“The governments of Myanmar, Mongolia and Mozambique are committed to developing functioning local stock exchanges which would spur active participation of international investors in domestic capital markets. Interestingly, M3 countries are uncorrelated, therefore, the diversified investment portfolio with exposure to M3 countries would benefit from a very low level of correlation between individual countries,” the company said.
The investment product will be marketed among international investors such as family offices, funds of funds and high net worth individuals.
“We are proud of developing M3 concept as innovative investment theme for frontier markets investors. Myanmar, Mongolia and Mozambique share some striking similarities and we are confident that their economies will be among the world’s fastest growing in the next decade and offer outstanding opportunities for investors. Our M3 Fund is the world’s first investment product offering investors an early, diversified portfolio exposure to these three resource-rich frontier markets,” said Alisher Ali, managing partner of Silk Road Management.
Photo: Mongolia landscape