A recent article in Financial Advisor concluded that most investors interested in frontier markets would be better served by choosing to blend the asset class with emerging market investments for the following reasons:
- The management fees are typically much lower than they would be if emerging market and frontier market funds or investments are pursued separately.
- The small and concentrated nature of stocks in frontier markets would be less concerning.
- It matters less when countries like the UAE and Qatar are moved from one index category to another as the historical performance would still be relevant for benchmarking purposes.
- Given the low correlation between emerging market and frontier market countries, the addition of the latter to most emerging market portfolios can serve to lower overall volatility while arguably having little impact on expected growth.
Finally, its important to remember that investors in both the emerging market and frontier market asset classes generally seek the same thing: to capture the potential growth opportunities in the less-developed economies and stock markets of the world.
To read the whole article, Frontier Markets: Concentrated And Misunderstood, go to the website of Financial Advisor. In addition, see: Frontier Markets: Small, Concentrated & Misunderstood (Financial Advisor).
- Frontier Markets: Small, Concentrated & Misunderstood (Financial Advisor)
- How the MSCI Emerging Markets Index Changes Will Impact Investors (P&I)
- Deciphering the Frontier Market Opportunity (Lazard)
- Three Reasons Why Investors Should Buy Frontier Market Stocks (The BlackRock Blog)
- Are Frontier Markets a Viable Alternative to Underperforming Emerging Markets? (PA)
- Frontier Market ETFs Have 72% Exposure to Oil-Dependent Countries (FT Adviser)
- Are There Greater Opportunities In Asia’s Frontier Markets Than in China? (FT)
- Investors Exit Africa for Other Frontier Markets (WSJ)
- Are Frontier Markets a Calculated Risk? (Bloomberg)
- Busting Frontier Market Investing Myths (Mobius Blog)
- How MSCI’s Removal of Qatar & UAE Impacts the Frontier Markets Landscape (MM)
- How Much Should You Invest in Emerging Markets? (The Telegraph)
- Frontier Markets: Attractive Valuations with Limited Correlation (Mobius Blog)
- Emerging Market Economies: A Brighter Outlook for 2019? (Hermes)
- Russell Frontier Markets Equity Fund’s Manager Sees Neglected Gems (WSJ)