Frontier Markets: One of the Last low-Correlated Asset Classes? (Commerzbank)

Frontier markets (FM) are countries that are less developed in their political, economic and financial framework than emerging markets (EM). Due to the higher domestic focus of their economies and the lower international ownership of financial assets, their financial assets tend to be less correlated to global developments. We compare index specifications in the equity and fixed income space. While a clear-cut definition exists in equities, the fixed-income space lacks a genuine benchmark index. FM assets generally outperformed during the taper tantrum. FM equities suffered lately from a mix of lower commodity prices and geopolitics while FM debt outperformed lately. We prefer FM exposure over EM in the run -up to the Fed lift-off. READ MORE