Why has volatility picked up in frontier markets?


Dec. 4 2020, Updated 10:52 a.m. ET

While these exotic markets are not for everyone, more aggressive investors should consider having a small strategic allocation to the frontier. I last highlighted the reasons why back in May. But in light of the market volatility since then, here’s an updated list of four reasons why to consider exploring the frontier (FM).

Market Realist – The graph above shows the 30-day volatility for the iShares MSCI Frontier Markets 100 ETF (FM). Although volatility (VXX)(XIV) is usually lower in frontier markets compared to emerging markets (EEM)(VWO), it has picked up in the last few months due to geopolitical risks in the Middle East. Remember that many of these markets are concentrated in Middle East and North Africa (or MENA, combined).

Please read the next few parts of this series to see why frontier markets make sense despite the recent uptick in volatility.

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