Meet the BlackRock Frontiers fund managers who go where most investors fear to tread

It's tempting to think of fund managers as desk-bound boffins with masses of research and data at their fingertips trying to make index-beating decisions.

The managers of the buccaneering BlackRock Frontiers Trust, Emily Fletcher and Sam Vecht, have a different approach.

Both are adventurers who tread where most sane City investors dare not go. The world is their oyster, and whether it is Syria, Tajikistan or Turkey, in the middle of a bombing of the parliament, they have travelled far and wide assessing investment opportunities.

Sometimes the adventures of a fund manager can be a bust.

Mr Vecht says: 'Going to Syria turned out to be a waste of time because there was a revolution, the Arab Spring.'

Meeting them in a hospitality suite high up in BlackRock headquarters in the City of London, where breakfast is served by a uniformed waiter, it is hard to imagine them on the road.

But there is an informal competition between Ms Fletcher and Mr Vecht to visit and make a judgment about investment conditions in the greatest number of countries.

Mr Vecht has lost count of the nations he has visited but it is around 80; Ms Fletcher may be just ahead.

She says: 'Our general rule is we will not invest in a country unless we've been there. Unless we have met management, typically five or six times, and we insist on meeting their customers.'

The duo make an unlikely pairing for globe-trotting investors. Ms Fletcher is a devout Christian with three youngish children. Mr Vecht is a traditional, kippa wearing, member of the Jewish faith with five children, who’s family life revolves around the North London community where he lives.

The pair are the eyes and ears on the developing world and emerging markets within the sprawling $11.5 trillion (£8.5 trillion) BlackRock asset management colossus.

They have become the first port of call for the most powerful figure in global investment, Larry Fink, the group's chairman and chief executive, when he heads off to exotic locations.

Fink himself, or someone in his office, will consult the Frontiers managers on political, economic and investment conditions in the country to be visited. And shareholders in the trust can tap into that knowledge too, for a 1.41 per cent ongoing charges annual fee.

The Frontiers managers make a virtue of openness and reaching out to financial advisors and investors. In a year when the investment trust sector has been targeted by American hedge funder Boaz Weinstein, of Saba Capital Management, this matters.

Mr Vecht says: ‘We’re interacting with investors at the AGM. We do open webinars and have answered as many as 70 questions in 45-minute. Understanding investing in countries inhabited by three billion of the world’s people isn’t a bad idea.’

Frontiers represents a high-risk investment strategy, operating across volatile political and economic landscapes. If you can stomach the risk, this can be rewarding. Since the fund was revamped in 2010, net asset value has climbed by 178.6 per cent.

This has considerably outperformed its current benchmark, MSCI Frontier Emerging Markets, by a cool 89.4 per cent.

Ms Fletcher says: 'We now invest in anything that isn't in the top seven emerging markets. We step outside that to explore markets we think are under-represented, under-talked-about, under-researched and super interesting.'

It means that China, Indian, Korea, Taiwan, South Africa and Mexico, which together represent 85 per cent of the global emerging markets index, are off the agenda.

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Frontiers has investments in the most volatile parts of the world, such as the Kurdistan region of Iraq. And it first visited Kazakhstan in 2004 and 2005, but it wasn't until 2018 that it felt comfortable about investing there.

Mr Vecht says: 'It's about putting in the shoe leather across a range of places. One must remember these are very challenged countries. They are not Scandinavian democracies.

'When people are excited about them it's probably a dangerous time because the risks are being priced. We've made money for clients, but we are buying a single stock, not a country.'

There is a tendency among many fund managers and investors to think of fast-growing India as the go-to place for future returns, but Frontiers has done well by investing in its neighbour, Pakistan.

Ms Fletcher says: 'I did travel to Pakistan, seven months pregnant. It was wonderful. Going for a barbecue in the hills of Lahore. There is a jarring dissonance with what you might read in the Press.'

Despite the risky places they visit, the pair prefer to travel without any particular security.

Mr Vecht says: ‘We want to learn about the country and the society. The worst experiences generally involve planes being stuck in the wrong place and realising you have no connectivity.’

As an investment strategy the Frontiers fund is careful not to become too involved in natural resources as BlackRock has specialist funds in the area.

'At its peak holdings in minerals, materials and energy have been at 20 per cent but are now more around 15 per cent.

Fletcher explains: ‘We have a notably large holdings in banks. At a time when foreign capital is perhaps less welcomed in the United States, people start to look elsewhere. Banks are often early cyclicals.

Almost all the banks we invest in are normal older banks such as a single country bank in Kazakhstan, Kenya, Argentina and Chile. There can be little correlation between them, and we tend to look for consumer exposure.’

Picking winners in far flung destinations and some of the least hospitable countries of the world is not easy and Britain’s colonial past carries its own burdens. Emily Fletcher, Sam Vecht and BlackRock Frontiers seek to overcome the history with capitalism and opportunity.