Are closed ended funds the best way to play frontier markets?

Chris Kitchenham, director at Walker Crips Stockbrokers, explains why he prefers closed ended funds for accessing frontier markets

We like to invest a small amount of some clients' portfolios in frontier markets and particularly like BlackRock Frontiers Investment trust (BRFI), the £177m fund managed by Sam Vecht. We have chosen a closed ended fund rather than an open ended alternative because of concerns over the relative illiquidity of these markets. We are concerned that a manager could be presented with distinct difficulties in redeeming huge amounts of stock as ‘hot money' or speculative short-term investors flow in and out of the fund when investment tides change. A closed ended manager can make better l...