Investors are wandering further afield in emerging markets in search of countries with better economic growth rates and more manageable debt relative to developed economies. Some are using frontier markets ETFs to buy countries and regions with one trade, low costs, diversification and liquidity.
These ETFs often invest in countries with more attractive GDP growth than the U.S. and other developed markets. Of course, they are riskier and long-term investors should be prepared to endure volatility. Investors also need to be cognizant of any currency-related risks in these foreign-equity funds.
Frontier markets represent 30% of the world's population "crammed into some of its fastest-growing economies," Farzad writes. "Nourished with enough stability and free-market reforms, and the noblesse largesse of foreign investors, frontier markets are primed to go more mainstream, especially with ETFs like the fledgling iShares MSCI Frontier 100 now casting for talent."
FM holds assets of $52.7 million and charges an expense ratio of 0.79%, according to manager BlackRock. The top five country holdings are Kuwait, Qatar, Nigeria, United Arab Emirates and Pakistan.
The frontier markets ETF is up about 9% the past three months.
iShares MSCI Frontier 100 Index
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.