Though a growing number of funds are providing access to frontier markets, it’s important to remember that frontier countries generally have less established equity markets, and more regulatory and political unknowns than markets elsewhere in the world. In other words — investing in them can be risky. [ETF Chart of the Day: Frontier Markets]
That said, frontier markets are a strategic asset class, along with US equities, bonds and gold, that investors want to consider always having a little of in a portfolio. Assuming that frontier markets will likely decrease in risk as they develop over the long term current valuations present a potential buying opportunity.
iShares MSCI Frontier 100 ETF (NYSEArca: FM)
Russ Koesterich, CFA, is the iShares Global Chief Investment Strategist.
The author is long FM.