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Wells Fargo Private Bank Director of Asset Allocation and Strategy Ron Florance on where the opportunities are in frontier markets.
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Disappointing data out of China today creates more concern over a global slowdown -- China has really been that one engine of excitement out there lately but.
There is one investing area you may not know about people are talking about it but growth has not hit the brakes there.
Front tier markets.
Where is that frontier disrupt that word but these are markets that can be though just to let you know even more risky than emerging markets like Brazil Russia India and China.
Robert Florence is the managing director of investment strategy at Wells Fargo private bank looking at frontier markets.
Let's get right to it these are Asian markets that people aren't really talking about that you feel might be real opportunity here where -- thing.
You know -- they are Asian markets but actually there on four continents we have a frontier opportunities in the Americas in Europe.
In Africa and in Asia are recent due diligence trip focused on Asia but the frontier markets are really a global strategy -- investors should probably consider today.
Well it's confusing for some people because they're used to -- familiar names out there -- -- countries but.
Let's talk about the Asian ones that are most recently the areas of interest review.
So we did a trip to Vietnam and Cambodia there -- two of the frontier markets on that that really stand the world and when investors look at these there's an opportunity set that.
These are countries that were like the emerging countries ten or fifteen years ago.
We -- really low per capita GDP.
Huge opportunities in infrastructure investments.
Consumer investments.
As well as just moving from the -- state dominated almost a Communist system at the privatization so.
Big opportunities over the next decade but.
Very unusual -- deep risks that investors need to be cautious of.
Out it sounds like capitalism is out there in big big -- Roy it'll form people are getting out -- they've just got a little jacket -- she writes so it's it's a little rough out there.
Vietnam there are opportunities in ways for the average investor to get in -- we started digging up some things that some.
Investment opportunities say for example the Templeton free markets fund.
Market sectors Vietnam ETF because there are people who are out there.
Compiling baskets of Vietnamese -- can you tell us a little bit about these and whether you like them.
And still -- kind of compelled by year -- royal capital and and it's a pretty good way to describe the environment.
You know when you're looking at -- front -- market investments single country risk is extreme.
You have.
Embryonic currencies you have government structures that are changing.
You have banking systems that are very very embryonic so when we look at this opportunity we want to really diversify globally diversified by region.
And by country.
Passive management in this space is probably not the best strategy if you just do.
A cap -- strategy in frontier markets.
You're gonna be overweight in the Middle East primarily in Kuwait because of capitalization.
If you do an equal -- strategy can be very overweight in Eastern Europe because the large number of of companies that have become public so.
And active management control this country currency -- liquidity and political risk I think is very important in the space has a long term strategy Liz this is not something that's gonna play out between now and Christmas this is.
Think of it as a private equity investment at the global level there should be part about a global portfolio that really.
Is held for ten years think of it in terms of that time horizon well.
Listen that's that's what people used to do women that got scared and they felt that there was so much gyrations in the markets that they started moving things around the fact is that.
Maybe three to seven years it gives you a better opportunity to see some smoothed out growth.
One quick question about South America let's talk about where you feel the real frontier opportunity is there.
Argentina is an interest in opportunity of great consumer I'm opportunities and privatization a lot of focus has been on Brazil which is still very strong.
Emerging economy.
But we want to go beyond that and really stand the economic.
An evolutionary spectrum and I think bringing in Argentina into a portfolio is a worthwhile.
Decision for investors.
-- come back we like your way of thinking.
Come back any time thank you for the invitation anytime -- Florence is Wells Fargo private bank managing director of investment strategy who would have thought 2030 years ago Cambodia and --
