The Middle East is shrouded in mystery and investors who want to dabble in those economies should do so with a bit of caution, say advisors, as exchange traded funds (ETFs) are allowing access for all.

ETF providers are already scoping out the Gulf as the next investment frontier. But advisors are warning that the waters are yet to be tested and just because there is access doesn’t mean it’s a good idea - yet, reports Richard Harris for Reuters.

Many ETFs have come to the market after the latest commodities implosion, with surging oil prices the number-one attraction to the region. This is still a volatile region, and the general consensus warns to stay away from chasing fads. One investment manager points out that there’s a lot more to investing in the Middle East aside from “There’s oil there; they’ll make money.”

It’s true that there are risks and other issues to consider, especially in an area such as the Middle East where there has been a lot of political volatility.

Investors need to know the risks and what they can tolerate. Everyone is different, and the Middle East may not be right for all investors and their portfolios. Wait until these funds establish long-term trend lines, and once they cross them consider if they’re for you. Protect yourself by having your stop loss in place.

So far, access is granted through:

• WisdomTree Middle East Dividend (GULF), down 2.5% since July 22 inception
• Market Vectors Gulf States (MES), down 9.8% since Aug. 22 inception

Tags: Emerging Markets, Frontier Markets, GULF, MES, Middle East

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