Why Frontier Market ETFs May Be the Next Big Thing | ETF Trends

Frontier markets are a notch below emerging markets, but they’re preparing to become a force in their own right. There are a variety of exchange traded funds (ETFs) that can help you access these nascent economies.

Over the next three-to-nine months, frontier markets are anticipated to outperform the emerging and developed markets, reports Allen Wan for Bloomberg. The Middle East is in a position to lead the way, since the region has not yet recovered from the global market meltdown, making valuations cheap. The region’s equities are expected to catch up as corporate earnings improve. (Read about five risks to the Middle East economy).

A frontier market is generally a country that is fairly poor. An example is most of Africa. (Four reasons Africa is appealing).

The markets are usually locked up with little or no liquidity, but they can be a good diversification tool for investors. They can be long-term uncorrelated investments and they have enormous potential for growth. There are currently 28 countries listed as frontier markets, reports IS for Intelligent Speculator. (Read about MSCI’s latest review of these markets).

For more stories about frontier markets, visit our frontier market category.

  • Claymore/BNY Mellon Frontier Markets (NYSEArca: FRN): up 57.2% year-to-date
  • PowerShares MENA Frontier Markets (NYSEArca: PMNA): up 24% year-to-date
  • Market Vectors Gulf States (NYSEArca: MES): up 24.9% year-to-date
  • WisdomTree Middle East Dividend (NYSEArca: GULF): up 17.4% year-to-date
  • SPDR S&P Emerging Middle East & Africa (NYSEArca: GAF): up 49.8% year-to-date
  • Market Vectors Africa (NYSEArca: AFK): up 43.5% year-to-date

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.