Emerging markets stocks and ETFs are struggling, but that has not contributed to diminished appetite for international equities among investors. Over the past month, investors have poured $2.8 billion into international equity ETFs, according to ConvergEx data.

Some of that is probably heading to frontier market funds. While frontier markets are perceived to be riskier than their emerging peers, ETFs offering exposure to the former group have held up nicely compared to popular emerging markets equity ETFs. Over the past three months, the iShares MSCI Frontier 100 ETF (NYSEArca: FM) has traded modestly higher while the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) is down almost 15%. [Frontier ETFs Hold up Despite EM Declines]

Investors have taken note of the out-performance offered by markets such as Kuwait, Nigeria, Qatar and the United Arab Emirates. These markets and others, though criticized for a lack of liquidity, are not intimately correlated to U.S. or developed market equities. Nor are frontier shares highly correlated to emerging markets stocks. That has given investors an outlet to seek non-developed market international exposure this year without being exposed to tumbling emerging markets. [Investors Exploring The Frontier]

According to Bank of America Merrill Lynch, frontier funds have attracted $1.5 billion in assets this year compared to steep outflows for many of the largest emerging markets ETFs.

One reason frontier markets have held up well this year is that many of these countries are not as affected by issues such as slowing growth in China and Federal Reserve tapering as developing economies like Brazil, India and Turkey.

“According to Thomas Hugger, CEO and fund manager of Hong Kong based investment firm Asian Frontier Investments, the reason why frontiers haven’t suffered as much is because they are relatively less dominated by foreign capital, compared to somewhere like India,” Katie Holliday reported for CNBC.

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