Fund Profile

Barings Emerging EMEA Opportunities 06 April 2023

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Barings Emerging EMEA Opportunities. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
A new version of this profile is available. View Latest
Overview

Barings Emerging EMEA Opportunities (LON:BEMO) invests in the diverse set of countries in the emerging markets of Europe, Middle East and Africa, a universe of countries experiencing rapid economic growth and development which are increasingly growing in weight within EM benchmarks but have historically been under-researched.

Emerging EMEA includes the Middle East, a rapidly developing and modernizing set of countries, where governments are utilizing resource revenues to further diversify their economies and push through a reform agenda underpinned by digitalization. It also invests in South Africa, which is resource-rich and has favourable demographics. Emerging EMEA has the distinct advantage of being a low cost producer of key resources, metals and liquids, that are not only necessary for today’s economy but have an important role to play in providing the materials and minerals required for the green energy revolution. Another key component is Eastern Europe where BEMO’s managers, Matthias Siller and Adnan El-Araby, have recently been finding attractive opportunities. BEMO has a substantial overweight to emerging European financials, which they think are well placed to sail through any volatility stemming from the recent issues with developed world banks (see Portfolio section).

Matthias and Adnan follow a GARP (growth at a reasonable price) investment strategy that considers both growth and valuation, and emerging European financials have been attractive on both grounds. Strong earnings growth trajectories have been boosted by Europe’s resilient economic performance in the face of high energy prices and geopolitical risks.

BEMO has a historic yield of 3.6% at the time of writing. Income growth is a key characteristic Matthias and Adnan look for in portfolio companies, and they believe the earnings trajectories of their portfolio should help BEMO continue to pay an attractive dividend. Additionally the board can add up to 1% of NAV to the dividend each year from capital. They have not done so over the past two years, and so this is a potential second source of dividend growth in the future.

Analyst's View

Emerging EMEA is a diverse region with a number of attractions: high GDP growth, low inflation in the Middle East, attractive demographics and exposure to some key trends such as the energy transition. The region is also well placed to benefit from global growth dynamics in both the east and west, such as Europe’s improved economic outlook and the reopening of China’s economy. The cyclical nature of the EM EMEA benchmark, caused in part by its large weights to financials and resources, may contribute to BEMO being on a wide discount. However, the managers are focused on identifying and investing in companies with structural earnings growth that should offset this cyclicality over the medium term. Additionally, the potential for earnings growth could see BEMO play a role as an income diversifier. Although the 3.6% yield at the time of writing is not high, there is the potential for growth over the long run which may suit investors with a long-term time horizon.

Last year was disappointing for BEMO shareholders, with the unforeseen invasion of Ukraine leading to the write-down of Russian equities held by foreign investors such as BEMO to zero. Critically, there is no further exposure to the country on the downside, only potential upside in the event of peace and the resumption of economic ties that may lead to a revaluation of Russian assets currently held by the trust. At the time of writing, BEMO is available on a wide discount of 19.6%, the widest in the global emerging market sector. This could prove to be a good long-term entry point, although we think the discount may persist while investors fret about the possibility of recession in key global markets.

Bull

  • Offers attractive diversification to the typical exposure of a global or global emerging markets trust
  • Has devoted considerable resources to the trust’s under-researched markets
  • Can invest in both fossil fuels and materials with a role to play in the green energy revolution

Bear

  • Political and liquidity risks can be higher in the smaller emerging markets
  • High materials and energy exposure could make the trust vulnerable to a global recession
  • The small size of the trust may deter professional investors
Continue to Portfolio

Fund History

16 May 2024 Fund Analysis
BEMO has had a strong year, and offers multiple layers of value…
20 Sep 2023 Five questions about emerging markets
We track key developments in the diverse emerging markets universe…
06 Apr 2023 Fund Analysis
BEMO aims to provide capital growth and an attractive level of income via investments across emerging Europe, the Middle East and Africa...
15 Sep 2022 Same same but different
We discuss the case for emerging markets at different stages of development…
29 Jul 2022 Fund Analysis
BEMO offers exposure to both sides of the energy transition…
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
25 Mar 2022 Slides and Audio: Barings Emerging EMEA Opportunities
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 16 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
23 Feb 2022 Regime change
Ahead of our spring conference, we ask whether investors need to junk their portfolios and start again…
26 Jan 2022 Fight or flight...
Two of our analysts debate the impact that war in Ukraine could have on investors' portfolios...
22 Dec 2021 No humbug
Our analysts look back at a year of predictions, theories and ideas, and highlight those they think could matter most…
08 Dec 2021 Results analysis: Barings Emerging EMEA Opportunities
BEMO has outperformed its benchmark and the emerging markets index in a barnstorming year for EMEA…
13 Oct 2021 Beyond the Middle Kingdom
As momentum falters in the emerging markets powerhouse, we examine the options for investors outside China...
29 Sep 2021 Fund Analysis
BEMO is a very different way to play the energy transition…
01 Sep 2021 Winter is coming
Summer was a welcome opportunity for exhausted investors to turn their backs on the legion threats they face, but they haven't gone away and the days grow short - we examine four in detail...
25 Aug 2021 Is the UK’s debt a ticking time bomb?
Our analyst argues Rishi is right to worry about government debt and borrowing…
28 May 2021 Results analysis: Barings Emerging EMEA Opportunities
Reporting results for the six months ending 31 March 2021, BEMO outlined the early success of the broadened investment strategy…
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: Barings Emerging EMEA Opportunities
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 02 March...
24 Feb 2021 Fund Analysis
BEMO is Barings Emerging Europe under a widened mandate offering greater alpha and dividend potential…
09 Dec 2020 A bumper harvest?
Agricultural and industrial commodities have rallied strongly, but what are the implications for emerging market allocations...?
13 Aug 2020 Underground bangers
We look for hidden gems in the smaller end of the investment trust universe...
24 Jun 2020 Fund Analysis
BEE’s portfolio’s cheap valuations and strong fundamentals make it a potential recovery play...
18 Jun 2020 Gimme shelter
As income investors brace for impact we ask which regions and trusts are less likely to cut their dividends in 2020…
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
18 Mar 2020 Their darkest hour?
We update our shortlist of discount opportunities...
16 Jan 2020 Drifting apart: how emerging markets have become less correlated
We examine how correlations between different emerging markets have evolved, and whether single country strategies could diversify returns going forward....
05 Dec 2019 Fund Analysis
BEE invests in strikingly cheap markets and has a strong track record of alpha and dividend generation…
06 Nov 2019 Times are a changin'? The case for a value resurgence
We are in the midst of the longest period of value underperformance since the 1920s. Could we be approaching a change in environment?
14 May 2019 Fund Analysis
Baring Emerging Europe offers a high dividend yield of 4.5% from its unique focus on a cheaply valued region ...
01 May 2019 Sweet or sour?
Three months in, we check up on our list of discount opportunities...
13 Feb 2019 Sweet treats
Eight trusts with the potential for strong returns, currently sitting on unusual discounts...
06 Feb 2019 Income for the long haul
With 'ISA season' looming we identify investment trusts which offer long-term, dependable income streams for yield-hungry investors...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
28 Nov 2018 Every cloud...
The endless grinding negativity of Brexit has driven investors away from Europe in scores, but some managers see rich pickings for those willing to take the risk...
10 Oct 2018 Information overload
Our analysis shows the long term case for emerging markets remains largely unaffected by much of the negative newsflow surrounding the sector...
09 Oct 2018 Fund Analysis
Baring Emerging Europe offers capital growth and a dividend yield from a unique portfolio of stocks in developing Europe...
30 May 2018 Forza Italia!
Recent weeks have seen Italy's rocky relationship with the EU thrust into the spotlight once again, but apart from fresh volatility - how much has really changed?
05 Apr 2018 The search for discounted yield
We scour the investment trust universe for trusts offering chunky yields on a discount...
29 Mar 2018 Fund Analysis
An unusual combination of high-alpha stockpicking, with a portfolio exhibiting strong growth credentials and decent dividend income
30 Nov 2017 Race ready?
We analyse the outlook for emerging markets and, in particular, the genuine active funds that focus on them…
27 Sep 2017 Fund Analysis
A differentiated equity growth offering a combination of capital growth and income generation from stcoks listed in countries such as Russia, Turkey and Poland...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.