Emerging and frontier markets offer investors potential growth in a bargain-fueled environment that hasn’t been kind to these developing countries. The economic effects of the pandemic, a strong dollar, and global inflation may have taken their toll, but for bargain-hunting investors, there could be value derived from these opportunities.
United Kingdom investors in particular are already taking advantage of value in frontier markets according to research from Dragon Capital, Vietnam’s largest independent asset manager. Environmental, social, and governance (ESG) investing is also a topic of interest that more investors want to see when it comes to investment products.
“The study found that almost six out of 10 of UK institutional investors and wealth managers strongly agree that frontier markets provide attractive diversification benefits compared with emerging and developed markets,” a Wealth Briefing article said.
The study itself was carried out on behalf of Dragon Capital via PureProfile, an independent research company. The study included interviews with 27 institutional investors and wealth managers in the U.K. during February 2022.
“Frontier markets typically have high rates of GDP growth and enjoy periods of rapid urbanisation, growing middle class formation, increased domestic consumption, and elevated levels of foreign direct investment, all of which make for attractive investment opportunities,” said Dien Vu, deputy CIO at Dragon Capital.
Frontier Markets Exposure in 1 ETF
Frontier market exposure is available via one exchange traded fund (ETF): the Global X Next Emerging & Frontier ETF (EMFM). EMFM seeks to improve upon traditional emerging market (EM) funds by excluding the slower-growing, developed EMs of Brazil, Russia, India, China, South Korea, and Taiwan, while including higher growth potential frontier markets.
EMFM offers investors:
- High growth potential: EMFM seeks to improve upon traditional emerging market (EM) funds by excluding the slower-growing, developed EMs of Brazil, Russia, India, China, South Korea, and Taiwan, while including higher growth potential frontier markets.
- Broad geographic exposure: In a single trade, EMFM offers access to 200+ securities from more than two dozen emerging and frontier market countries.
- Multi-sector approach: In addition to balancing geographic exposure, EMFM tracks an index that caps sector concentration at 30%, ensuring that stocks are selected from a range of industries.
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