Given that frontier markets are smaller and hard to access, what’s the draw for an investor? There are a few potential portfolio benefits to be aware of:
1) Widen scope. Frontier markets (FM) give investors the opportunity to broaden their global exposure, widen their capitalization spectrum and even gain access to particular areas of growth. For investors looking to complete their international investment exposure, frontier markets can sometimes literally be “the final frontier” of their portfolio.
Market Realist – The above chart shows the distribution of developed markets (VEA), emerging markets (EEM)(VWO), and frontier markets (FM). An investor whose portfolio focuses on the U.S. equity market (IVV)(SPY) can benefit from increased global exposure and diversification by investing in frontier markets (FM). You can get exposure to frontier markets through the iShares MSCI Frontier 100 ETF (FM).