Pakistan holds firm for Tundra Fonder

Sweden’s Tundra Fonder launched its Pakistan fund in late 2011. This year net monthly flows are starting to pick up pace along with the country’s improving sentiment among international investors, says portfolio manager and partner Johan Elmquist.

Tundra’s Pakistan fund has hit about $40m equivalent in assets under management, following an improving net inflow through 2012.

The trigger for this, according to Johan Emlquist, Stockholm based portfolio manager and partner, is the improving long term prospects for the country in its relationship with neighbouring India. It also reflects the risk on appetite among Swedish investors during the first couple of months of 2012. However, Elmquist notes that the flows have continued through April and into May despite a broader risk-off attitude taking root once more in the local Swedish market for funds – the Swedish Investment Fund Association’s (Fondbolagens förening) figures for April show that fixed interest products once again dominated net sales.

“We saw more risk on in January and February, but in April and May there has been more risk off. The interesting thing, however, is that our inflows to the Pakistan fund have accelerated in April and May, when we’ve seen outflows from our own Russia fund, for example.”

Selling a fund nearing $40m is easier than one at $1m of AUM, Elmquist notes, but adds that he believes it is the overall improvement in the Pakistan story that is attracting investors in Sweden and Finland – the two markets where the fund is currently authorised for marketing and sales. Growing in size will also make it easier to make sales elsewhere – such as to fund of funds buyers who previously expressed interest but were turned off by the fund’s size in its early days – as well as considering next steps in terms of wider cross border European sales, Elmquist says.

“What happened on November 2nd was that Pakistan declared India to be a ‘Most Favourable Trading Partner. It is not that long ago that there was more or less a war situation in Kashmir.”

“Since November there has been increasing news about the improvement in the relationship. That has led international frontier investors to start going back into Pakistan again.”

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