Poland Has Potential As Top Holding in Frontier Market ETF | ETF Trends

With the recent launch of the Claymore/BNY Mellon Frontier Markets (FRN), it is now possible to invest in the first U.S.-listed exchange traded fund (ETF) that provides investors access to up to 41 countries considered “frontier markets.”

These markets are very important to consider given that many of the emerging markets, such as China, are now approaching more of a developed market status. One of these frontier markets worth noting is Poland.  When looking at FRN’s holdings by country, Poland sits atop the list at 23.5%.

Since 1990, Poland has pursued policy to liberalize its economy and has prevailed among transition economies. Gross domestic product (GDP) grew by roughly 6.5% in 2007 given rising private consumption, a jump in corporate investment, and EU fund inflows.

EU membership and accessibility to EU funds have generated a major boost to the economy since 2004. Although unemployment is falling rapidly, it was estimated at 12.8% in 2007, where it sat well above the EU average.  Important industries in the Polish economy include machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, and textiles. Poland also has several important natural resources including coal, sulfur, copper, natural gas, silver, lead, salt, amber and arable land.

Poland’s economic performance is likely to improve, but in order to do so it must address certain deficiencies in its business environment. An ineffective commercial court system, a rigid labor code, “bureaucratic red tape,” and lower-level corruption keep Poland’s private sector from performing.

The new PO/PSL coalition government has made public its intention to enact business-friendly reforms, reduce the growth of public sector spending, lower taxes, and accelerate privatization.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.