Better Investing Strategy: Blend Emerging & Frontier Markets (Financial Advisor)
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)
- Frontier Markets: Attractive Valuations with Limited Correlation (Mobius Blog)
- Are There Greater Opportunities In Asia’s Frontier Markets Than in China? (FT)
- How the MSCI Emerging Markets Index Changes Will Impact Investors (P&I)
- Frontier Market ETFs Have 72% Exposure to Oil-Dependent Countries (FT Adviser)
- Three Reasons Why Investors Should Buy Frontier Market Stocks (The BlackRock Blog)
- Investors Exit Africa for Other Frontier Markets (WSJ)
- Deciphering the Frontier Market Opportunity (Lazard)
- Are Frontier Markets a Viable Alternative to Underperforming Emerging Markets? (PA)
- Unlike Emerging Markets, Frontier Markets Are a Less Volatile Haven (FT)