Roger Nusbaum submits: One reader questioned why only having 2% in frontier markets thinking 3% is about the minimum for a holding. I tend to weigh most stocks at 2 or 3% -- I don't think 2% is too small.
The context of 2% is that emerging markets are somewhere around 7% of the global market. So 2% in a frontier stock/single country fund/broad-based fund is around 1/3 of the allocation.
When I first bought the Vietnam Fund [VTOPF] that I have written about a zillion times I felt it had the potential to double. If correct, a 2% weight adds 200 basis points to the total portfolio, which I think is a lot, and is what I'm going for with something like this.
It came close to doubling; I scaled back to about 2%, and still think it can double, but I have no idea in which direction the next 30% might be.
Most of the frontier markets seem to have that kind of potential, but clearly where that potential does exist so too does cutting in half exist as a real possibility.
There are individual stocks and a few LSE traded vehicles that are kind of like closed end funds available too. There are three NYSE CEFs that invest in Russia/Eastern Europe that you can check out, Central Europe & Russia Fund CEF (NYSE:CEE), Templeton Russia & Eastern Europe Fund CEF (NYSE:TRF) and Morgan Stanley Eastern Europe Fund Inc. (NYSE:RNE). The each have their quirks, and are not ideal, but they are easy if that is what you are looking for.
If you want this type of exposure I think you need to be prepared to roll up your sleeves to find and then get to know the choices.