An attractive investment opportunity
Bangladesh one of Acadian Asset Management’s top picks for 2017 from the frontier market (FRN) (FM) universe, reflective in its portfolio exposure. Bangladesh presents “an attractive investment opportunity in our view from a broad market perspective,” Asha Mehta, Senior Vice President and Portfolio Manager at Acadian Asset Management, told Frontera. “It is attractively valued, trading at 12.5 times price to earnings,” she said. The frontier markets, broadly, are currently trading at 14.18 times earnings, while the emerging markets (EEM) (VWO) are trading at 15.57 times earnings. It also happens to be one of the better-performing markets this year.
Acadian is overweight Bangladesh, here’s why
Acadian has been overweight Bangladesh for a while now, and that exposure has been well rewarded. It may have fallen out of certain investor’s favor due to political risk. Nonetheless, Acadian’s top-down view on the market remains very positive, based on:
- “fundamentals for the economy being robust, with one of the lowest debt-to-GDP ratios
- it is one of the fastest growing economies in the world (ACWI) (VTI)
- low cost of labor adding to its attractiveness as an investment destination
- Very entrepreneurial workforce
- A stable currency,” said Asha
With respect to Bangladesh, Acadian’s sector exposures are primarily focused on:
- infrastructure via steel companies
- the belief that its low-cost labor manufacturing hub characteristic should benefit textiles companies
- the health of the broader economy, including banks and companies from its unique and active healthcare sector
Currently, “investors can look at the pharmaceutical sector, which is at an interesting point in terms of technicals and valuations, as well as, the overall health of these companies,” said Asha.
You may find our earlier article This Bangladesh Stock Is a Standout For Frontier Market Fund Managers interesting.