Why Frontier Market ETFs May Be the Next Big Thing

Frontier markets are a notch below emerging markets, but they’re preparing to become a force in their own right. There are a variety of ETFs that can help you access these nascent economies.

Over the next three-to-nine months, frontier markets are anticipated to outperform the emerging and developed markets, reports Allen Wan for Bloomberg. The Middle East is in a position to lead the way, since the region has not yet recovered from the global market meltdown, making valuations cheap. The region’s equities are expected to catch up as corporate earnings improve.

A frontier market is generally a country that is fairly poor. An example is most of Africa.

The markets are usually locked up with little or no liquidity, but they can be a good diversification tool for investors. They can be long-term uncorrelated investments and they have enormous potential for growth. There are currently 28 countries listed as frontier markets, reports IS for Intelligent Speculator.

• Claymore/BNY Mellon Frontier Markets (NYSEArca: FRN): up 57.2% year-to-date

• PowerShares MENA Frontier Markets (NYSEArca: PMNA): up 24% year-to-date

• Market Vectors Gulf States (NYSEArca: MES): up 24.9% year-to-date

• WisdomTree Middle East Dividend (NYSEArca: GULF): up 17.4% year-to-date

• SPDR S&P Emerging Middle East & Africa (NYSEArca: GAF): up 49.8% year-to-date

• Market Vectors Africa (NYSEArca: AFK): up 43.5% year-to-date

Comments

[Bob Mayo:]

Interesting. According to Wikipedia, MSCI classifies 23 countries as developed markets, 22 as emerging markets, and 29 as frontier markets. Wikipedia also lists a total of 203 sovereign states in the world. That leaves 129 countries that are not on investor's radar.

This makes me wonder if buying a plane ticket, renting a LandCruiser, and doing a Jim Rogers adventure-capitalist thing would be profitable.

Oct 18 09:04 PM

[fran:]

try it and report back. if you've the time and money


On Oct 18 09:04 PM Bob Mayo wrote:

> Interesting. According to Wikipedia, MSCI classifies 23 countries
> as developed markets, 22 as emerging markets, and 29 as frontier
> markets. Wikipedia also lists a total of 203 sovereign states in
> the world. That leaves 129 countries that are not on investor's radar.
>
>
> This makes me wonder if buying a plane ticket, renting a LandCruiser,
> and doing a Jim Rogers adventure-capitalist thing would be profitable.

Oct 19 04:12 PM