HSBC Global Asset Management launched a long-only frontier markets equity fund for retail and institutional investors offering significant exposure to Mena.

The Luxembourg-domiciled HSBC GIF Frontier Fund, which will launch with £80m ($124m), absorbs the portfolio of the existing HSBC New Frontiers Fund, launched in 2008. The newly-created portfolio carries the same objective as the previous one, aiming to achieve long-term capital growth by investing in the securities of companies located in frontier and emerging markets.

HSBC will invest 40% of the fund’s assets in the Mena region, focusing mostly on Qatar and the UAE, fund manager Andrea Nannini, told Mena FM. “Those are two countries that benefit from good economic growth as well as stability: 80% of the population is expat and the 20% of locals are very wealthy,” he said. “Qatar is especially interesting because of its gas reserve and the coming football World Cup from which a lot of companies are going to benefit from.”

HSBC said in a press release that frontier markets are characterised by an early stage of economic, political and financial development and although they present a higher risk profile than traditional emerging market nations, they offer higher growth rates and returns over the long term.

“HSBC’s research forecasts that by 2050 the collective size of the economies we call ‘emerging markets’ will increase five-fold and will be larger than the developed world, with 19 of the 30 biggest economies being from the emerging world,” said Andy Clark, head of wholesale, EMEA, HSBC Global Asset Management.

The new fund’s annual management charge is 1.75% for retail investors and 1.25% for institutional investors. The minimum investment for retail investors is $5,000 and $1,000,000 for institutional investors.