Laurium Capital’s Africa USD Bond Fund provides an excellent way to access great returns by investing in frontier African market sovereign bonds.
The fund allows investors to benefit from Africa’s high-growth economies via debt markets – specifically, US-dollar-denominated fixed-income instruments called eurobonds. “Over time, the fund’s USD Eurobonds have performed very well,” said Laurium Africa USD Bond Fund portfolio manager Paul Robinson.
“Yes, there will be some short-term volatility, but over the long term, you have been, and we believe will continue to be, paid to take on this risk.”
This is evident when looking at the performance over the past 15 years, with the Africa-focused sovereign eurobonds delivering 7.6% annualised returns in USD.
With global high-yield bonds only achieving 6.5% annual USD growth – and more established emerging market bonds in countries like South Africa, Turkey, and Brazil under 5% USD growth per year – the Africa USD Bond Fund has been the superior investment choice.
Sociopolitical improvements in frontier African markets are the driving force behind the growth potential of African eurobonds.
“African governments are getting far more involved with the IMF and the World Bank, which they have previously been more suspicious of,” said Robinson.
He cited the transition from bilateral loans, which were often unclear in their terms, to more multilateral loans, and borrowing via eurobonds, which make it easier to identify and manage a country’s debts.
“The bottom line is that African eurobonds have been a great asset over time, even during the recent trying times,” said Robinson.
“If you had invested $100 in Africa bonds in 2019, just before COVID started, you would have $115 – whereas the same investment into the so-called safe haven of US treasuries would only be worth about $95.”
The Laurium Africa USD Bond Fund is notable for excluding South Africa from its asset allocation, despite the country being one of the most prominent markets in Africa.
Robinson explained that including South Africa in the Africa USD Bond Fund would require many South African investors to mix their offshore and onshore investments, complicating regulatory compliance.
Even more important is that South Africa offers a very different investment opportunity from the rest of Africa.
“South Africa is well-developed as far as emerging markets go, and many of its largest companies have global presences,” said Robinson.
“Our Africa USD Bond Fund focuses on giving investors access to frontier markets, where there is higher growth potential.”
Laurium Capital is a leading boutique fund manager with R56 billion in assets under management.
It has invested in African markets for over 16 years, both in fixed income and equities, and has seen incredible performance from its Africa-focused funds.
“Our success is driven by our commitment to understanding the markets in which we invest,” said Robinson.
“We frequently travel to these African countries and meet with various companies, organisations, and policymakers in these regions.”
Contact us to learn more about its Laurium Africa USD Bond Fund.
Article from Business Tech.
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