Currently Available Conventional Investment Options in Frontier Markets

Abstract

Most professional investors such as institutions, high-net-worth individuals, endowments, and family offices wish to have international diversification and exposure to emerging and frontier markets in their portfolios. When countries depend on growth in different economies with different activities and consumption patterns, this leads to less than perfect correlation of their economic performance. Investing in several uncorrelated countries thus reduces risk in a portfolio. But this is not the only reason for exposure to frontier markets. Fund ma nager Mark Mobius, who oversees more than US$40 billion in emerging-market assets at Franklin Templeton Investments, believes frontier markets represent what the BRICS countries were 20 to 25 years ago.1 They offer growth prospects for the future when established markets may stagnate. Investment professionals such as Mobius have sought exposure to frontier markets for a long time. It is only recently that retail investors have access to these markets as well. Frontier markets offer attractive long-term prospects to global investors. However, most currently available retail investments lump all frontier markets together and exclude most of those in the ASEAN. In reality, frontier markets are diverse. Their cultures, people, and languages differ, their economies and available resources also vary widely. As a result,