That is the long-term view and one that could easily be validated with time. In the here-and-now, FM needs to see a sustained rally in oil prices. FM’s year-to-date loss nearly matches that of the Global X Nigeria Index ETF (NYSEArca: NGE). Until recently, Vietnamese stocks have been a drag on FM as the Market Vectors Vietnam ETF (NYSEArca: VNM) is off nearly 8% this year. [Quiet Rally for the Vietnam ETF]
Argentina is FM’s second-largest country weight behind Kuwait, but the 16.2% gained this year by the Global X MSCI Argentina ETF (NYSEArca: ARGT) has not been enough to prop up FM. Along with the new Global X MSCI Pakistan ETF (NYSEArca: PAK), ARGT, NGE and VNM are the single-country ETFs offering access to the nations found in FM’s lineup.
As Morningstar notes, FM still possesses its familiar advantages of low correlations and reduced volatility relative to the MSCI Emerging Markets Index. For example, NGE has a beta of just 0.64 to the MSCI Emerging Markets Index while VNM has a correlation to the S&P 500 of just 0.47, according to Market Vectors data.
“Over the past few years, during “risk-off” periods, volatility in emerging-markets stocks has been exacerbated by fickle foreign fund flows. With low levels of foreign ownership in frontier-markets lass has not been as susceptible to volatile foreign fund flows (except in extreme stocks and bonds, however, this asset c events such as the 2008 financial crisis). However, frontier markets’ correlations will increase should foreign ownership in frontier-markets stocks continues to rise,” according to Morningstar. [Now There’s a Pakistan ETF]
iShares MSCI Frontier 100 ETF
