The iShares MSCI Frontier 100 ETF (NYSEArca: FM) has had a banner year thus far, particularly when measured against comparable, diversified emerging markets ETFs. Here is the proof: FM is up 15.1% year-to-date while the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) and the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) are down 5.8% and 6.9%, respectively.

One of the primary drivers behind FM’s out-performance of rival emerging markets funds is the ETF’s Middle East exposure. Kuwait, Qatar and the United Arab Emirates are the ETF’s three largest country weights, combining for 59% of the fund’s weight. Equity markets in those countries have surged this year, helped in large part by financial services and real estate shares. Some Middle East countries tend to peg their currencies to the U.S. dollar. Consequently, their currencies have held up while many other emerging market currencies faltered. [Middle East Exposure Supports Frontier Market ETFs]

However, FM is going to look a lot different in the second quarter of next year. That is when Qatar and UAE join the MSCI Emerging Markets Index. The index provider announced that promotion earlier this year. While Kuwait will remain as part of FM’s index, the ETF may not offer a sequel to this year’s returns when Qatar and UAE leave. [Frontier ETFs Leave Emerging Markets in the Dust]

“The two upgraded countries are the biggest drivers of 2013’s surge. Stocks from the U.A.E. and Qatar rose 47% and 22%, respectively, through August, and together drove about 55% of the iShares ETF’s return for the period,” reports Brendan Conway for Barron’s.

While Kuwait’s weight in FM will likely rise after a bit after Qatar and UAE leave, so will volatile Nigeria’s. Perhaps Pakistan’s presence in FM will increase as well and Morocco will join the fund’s fray because MSCI demoted the North African country to frontier from emerging status this year. Nigeria and Pakistan currently combine for 16.5% of FM’s weight. Other top country exposures include Argentina, Oman and Vietnam.