FM is far from a risk-free play. Potential investors should be aware that frontier markets come with increased risks. For instance, FM’s holdings have higher-than-normal tracking error, are relatively small and are less liquid compared to the large-cap names that are found in so many emerging markets ETFs.
Additionally, some market observers have expressed concern about the future holds for FM now that Qatar and UAE, a combined 32.3% of the ETF’s weight, have been upgraded to emerging markets status. That means the two countries will enter the MSCI Emerging Markets Index next year leaving Kuwait and Nigeria to dominate FM’s country exposure.
iShares MSCI Frontier 100 ETF
Tom Lydon’s clients own shares of EEM.