Frontier markets

November 8, 2010

Over the past decade, frontier equity markets—or those equity markets of the least rich and developed countries—have experienced strong returns with low correlation to traditional asset classes.

In general, Frontier Markets offer strong growth opportunities and some diversification benefits, which can make an investment attractive to investors with a high target return who also seek diversification.  The complexity, illiquidity, and other challenges indicate that an investment in this area will not be well suited to all investors.  The risks and uncertainties associated with an investment in Frontier Markets are significant, but a modest allocation can make sense if the short to medium term risks are managed and monitored.