ETF Chart of the Day: More Fun on the Frontier

Several months back we spoke about the asset growth in 2013 in a Frontier Markets devoted ETF, FM (iShares MSCI Frontier 100, Expense Ratio 0.79%), which has taken in approximately $345 million year to date via inflows.

FM has not disappointed in terms of performance this year, trading near all-time product highs at the moment despite recent headwinds that we have seen in the related Emerging Markets Equities space via outflows in benchmark products EEM (iShares MSCI Emerging Markets, Expense Ratio 0.67%) and VWO (Vanguard Emerging Markets, Expense Ratio 0.18%).

As we have pointed out in the past, the underlying index basket that FM is tied to provides exposure to countries including Kuwait (21.23%), Qatar (17.80%), the U.A.E. (14.18%), and Nigeria (13.71%) to name a few holdings, which are designated as “Frontier” economies by the index provider, in this case MSCI.

While FM is the largest Frontier Market dedicated ETF at the moment in terms of asset size, three other alternatives exist in this space as well, the second largest being FRN (Guggenheim Frontier Markets, Expense Ratio 0.65%). Unlike FM, FRN has its heaviest exposure to Latin America via Chile (50.68%), Colombia (14.74%), and Argentina (9.33%), and to a lesser degree Africa and Emerging Asia.

As a result, FRN has not nearly performed as well as FM this year because of the differing exposure and the fact that Latin American equities have largely traded sideways this year. FRN currently has just shy of $92 million in assets under management and is followed by two even smaller funds in the space, PMNA (PowerShares MENA Frontier Countries Portfolio, Expense Ratio 0.70%) and the just launched (November 2013) EMFM (Global X Next Emerging & Frontier, Expense Ratio 0.58%).