BMO Global Asset Management has launched a new fund that will invest in small companies in emerging markets.

The BMO LGM Global Emerging Markets Smaller Companies Fund will invest in small companies established in, or deriving a significant amount of income and profit from, emerging markets.

It may also invest a portion of its assets in frontier markets, in line with LGM Investments' benchmark agnostic investment style.

The new fund will have a long-term investment horizon and will look to invest in cash generative, high-quality companies at reasonable prices.

LGM Investments defines 'quality' under four criteria: sustainable business models, robust balance sheets, proven management teams, and a clear alignment of interest between majority and minority shareholders.

Thomas Vester, chief investment officer of LGM Investments, said LGM is excited about the launch.

He said: "The emerging markets smaller companies sector offers long-term investors a fantastic opportunity to find quality businesses that are not yet appreciated by the wider market.

"Our quality-focused process thrives in this kind of environment where we aim to identify great companies that have the real potential to grow at high rates in the long term."

Irina Hunter is the lead portfolio manager for the fund, with Claire Franklin as co-portfolio manager.

Irina Hunter, said emerging markets smaller companies are one of the few places left where a genuine information advantage can be achieved.

"Simply speaking, the sector lacks research coverage and, as such, price discovery – so as stock pickers, this gets us very excited and allows us to find fantastic businesses, achieving great things, which are simply not appreciated by the market yet."

First published 04.08.2017

Lindsay.sharman@wilmingtonplc.com