Allan Gray The Allan Gray Podcast

34. Exploring the frontier: Why elevated risk offers enticing opportunities

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Global markets are navigating a challenging mix of persistent conflict, energy insecurity and volatile inflation, stoking fear among investors. In frontier and smaller emerging markets, that fear weighs heavily on asset prices, often sending them well below what the underlying business fundamentals suggest.

Horacia Naidoo-McCarthy, a manager in the Institutional Clients team, is joined by portfolio managers Rory Kutisker-Jacobson and Varshan Maharaj to explore opportunities in unloved or overlooked markets amid uncertainty. Using some examples from the Allan Gray Frontier Markets Equity Fund’s investment universe, they discuss the distinction between structural and cyclical risk, how deep fundamental research can uncover high-quality businesses hidden in plain sight, and where patient long-term investors may be rewarded for leaning into risk when fear dominates asset prices.
Chapters
  • 00:05 Introduction
  • 05:22 Why markets often overestimate risk
  • 08:44 Cyclical vs. structural risk
  • 11:37 Case study: Halyk Bank (Kazakhstan)
  • 17:45 Liquidity and market sentiment
  • 25:42 Fund construction and philosophy
  • 32:26 Expanding the investable universe
  • 40:20 Currency considerations
  • 44:08 Closing thoughts
4 May English South Africa Business · Investing

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