Roger Nusbaum submits: There was an article in Barron's about Frontier investing. I have talked about this but have not used that term before. Frontier refers to countries that are lower down on the development ladder than emerging markets. Countries in this category, per the article, include Vietnam, Pakistan, Mauritius (which looks somewhat like New Zealand to me), Romania, most of the African continent and a few others.
I first wrote about this idea a year and a half ago. A benefit to investing in this type of country is a reasonable chance of not correlating to other countries and global economic cycles. I have referred to this in past posts as countries within their own worlds. For example Vietnam has a GDP growth rate of 8%, moderate inflation, and a total market cap that is smaller than most mid cap stocks. On the down side is potential corruption, an economy that is too small, there was the potential execution of a trader who allegedly committed fraud and more. I would think that all of the frontier markets have long lists of pluses and minuses.
I think the idea of owning one of the countries, after a lot of study, can add value to a diversified portfolio. Think small weight here, like maybe 1%-1.5%.