The Global X Next Emerging & Frontier ETF (NYSEArca: EMFM) has also seen positive flows. EMFM’s underlying index, the Solactive Next Emerging & Frontier Index, features allocations to markets such as Pakistan, Bangladesh, Gabon and Laos in addition to more traditional emerging fare like Malaysia, Thailand and Indonesia. BBRC is up 4% this year while EMFM is higher by 5.1%. [An Emerging/Frontier Combo ETF]
A large part of FM’s success since early 2013 is attributable to the ETF’s large allocations to stocks in the United Arab Emirates and Qatar, two countries that currently account for over 35% of the fund’s weight. However, those countries will join the MSCI Emerging Markets Index in May, meaning Kuwait and Nigeria will combine for almost half of FM’s weight. [Frontier Markets Could See Emerging-Style Volatility]
Investors looking to maintain ample exposure to Qatar and UAE after the move to the emerging markets index can consider the WisdomTree Middle East Dividend Fund (NasdaqGM: GULF) and the Market Vectors Gulf States Index ETF (NYSEArca: MES), which have brought in nearly $30 million combined this year.
Qatar and UAE combine for 57% of GULF’s weight and 64% of MES. Since the ETFs are dedicated Middle East ETFs, not explicit frontier funds, they can maintain large Qatar and UAE allocations even after the countries move to the MSCI Emerging Markets Index. The two ETFs are up an average of 12% this year. [The Best Middle East ETF]
iShares MSCI Frontier 100 ETF
ETF Trends editorial team contribute to this post. Tom Lydon’s clients own shares of EEM.