Paris-based asset management firm, Amundi, have launched its latest fund: Amundi Funds New Silk Road.
Inspired by the ancient Silk Road, in 2013, China proposed the Belt and Road initiative (BRI), which acts as a catalyst for new trade routes and growth across Asia, Europe, the Middle East and Africa and stimulates economic growth and capital formation beyond China. The BRI covers more than 65 countries, with EUR1 trillion of planned investments in 1,700 infrastructure projects.
The fund will seek out investment opportunities in the markets benefiting from the development of new trade routes across Asia, Europe, the Middle East and Africa. By investing in the equity of companies which derive substantial revenues in markets and have significant business that benefits from the development of the new silk roads, the fund seeks to achieve long-term capital growth above the broader emerging market equity space. Rather than focus purely on investments that could benefit from second or third order effects from China’s BRI, Amundi is also looking to benefit from second or third order effects of the BRI and similar initiatives aimed at growing trade along the New Silk Roads.
The investment process is designed to navigate geo-political sensitivies along the New Silk road, integrating top down analysis with stock picking. Suitable stocks are integrated into Amundi’s emerging market macro views combined with further country, sector and style analysis drive allocations. The portfolio is then opimised using proprietary portfolio construction techniques to arrive at a balanced risk distribution. The objective is to have a high-conviction portfolio of 60-90 names.
This follows the launch of New Silk Road cross asset solutions, which have attracted more EUR459 million since April 2019.
Nicholas McConway, Head of Thematic & Concentrated Strategies leads the New Silk Road strategy team. The strategy is co-managed by Giampaolo Isolani, Head of Investment Solution & Market Intelligence and Deirdre Maher, Head of Frontier Markets – Equity. McConway, Isolani and Maher will work with the Emerging Markets Equities team. The team is part of the broader Amundi Emerging Markets Investment platform, created in 2011 which manages approximately EUR45 billion in dedicated Emerging Markets Equity, Fixed-Income and Cross-Assets strategies.
Yerlan Syzdykov, Global Head of Emerging Markets, says: “The Amundi Funds New Silk road aims at investing in the areas associated with the BRI project, rather than investing directly where the BRI invests. We have observed that many BRI projects with potential primary effects may not offer the most attractive investment opportunity. Hence, we are willing to look beyond China and infrastructure to seek out investment opportunities that we believe will benefit from the expected expansion in trade and associated economic growth along the new Silk Roads.”