Bjrn Englund probably has one of the hardest day jobs going. He's the manager of the $29.9M Iraqi-focused Babylon Fund, and he wants to convince us that Iraq is a credible place to park money for the long haul. And so far, he's not doing such a bad job.
The fund rose 3.1% in August and had the best year-to-date performance last month, up 43% in 12 months. The biggest riser was the fund's largest holding, the five star Al Mansour Hotel in Baghdad, while oil drilling investments also did well.
"Iraq is trending successfully in its transformation from a pre-frontier to a normal frontier market, and with good potential to enter the standard emerging-market bloc a few years from now", says Englund in his latest letter to investors.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Now, as risk/reward opportunities go, Iraq is probably sandwiched somewhere between Argentinian government debt and shares in General Motors. But when it comes to potential, it has it in spades.
Consider this: in 1980, the word "Baghdadi" meant "big spender" in many Arab dialects. Average income was $3,600 per person. By 2001, it had fallen to between $770 and $1,020. It's only recently clambered back above $3000, ranking it second-last among the 17 other countries in the region. GDP per head in Algeria is $8,344; in Saudi Arabia it is $23,928, and in Qatar it is $58,004.
But sitting on the world's third-highest proven reserves of oil in the world, Iraq probably has a better chance than ever of getting back to the good old days when it was known for its enviable public services, and its citizens were known for their conspicuous consumption. Iraq is now producing an average of 2.5 million barrels of oil a day, its highest level since the US-led invasion in 2003. But at its peak in 1990, it was extracting closer to 3.5 million.
The minimum investment in the Babylon Fund is $100,000. Wealthy investors with a high appetite for risk, as we pointed out last year, you'll be hard-pushed to find a purer play on the country.
-
How to invest in frontier marketsFrontier markets can be extremely risky, but they offer access to exotic stocks in rapidly developing countries
-
Should you put your trust in investment trusts?British investors have steered clear of investment trusts in recent years. They are missing a trick, says Max King
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
-
This isn’t the stagflationary 1970s – but neither is it the low-rate world of the 2010sOpinion With soaring energy prices and high inflation, it might seem like we’re on a fast track back to the 1970s. We’re not, says Merryn Somerset Webb. But we’re not going back to the 2010s either.
