The Babylon Fund: for wealthy investors with a sense of adventure
Björn 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.
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.
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.