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Investing in Frontier Markets by TrendFollower

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I thought I would start a thread on investing in Frontier Markets. This is an area that I invest in and have been for many years. It is extremely high risk but at the same time there are significant returns that have been achieved and could still be achieved going forwards in the the future. The potential is huge. 

Let me start by defining which countries actually make up the Frontier Markets. There are 29 countries that are recognised by the MSCI and they are:

  • Argentina
  • Bahrain
  • Bangladesh
  • Burkina Faso
  • Benin
  • Croatia
  • Estonia
  • Guinea-Bissau
  • Ivory Coast
  • Jordan
  • Kenya
  • Kuwait
  • Lebanon
  • Lithuania
  • Kazakhstan
  • Mauritius
  • Mali
  • Morocco
  • Niger
  • Nigeria
  • Oman
  • Romania
  • Serbia
  • Senegal
  • Slovenia
  • Sri Lanka
  • Togo
  • Tunisia
  • Vietnam

Now to most normal investors there will not be investment funds available for to invest in majority of the countries on an individual basis. Yes there may be a Vietnam fund but generally one will have to invest in either a Frontier Market investment fund like an OEIC / Unit Trust, Frontier Market Investment Trust or a Frontier Market ETF. 

A lot of investors who have the risk tolerance and higher risk threshold ignore Frontier Markets. 

Vietnam for example is being touted by the World Bank to be one of Asia's fastest growing economies in 2019. They are suggesting a 6.6% Gross Domestic Product (GDP) rate forecast. There are rumours that Vietnam is being considered for Emerging Market status. Frontier Markets have the potential to become tomorrow's Emerging Markets such as Brazil, Russia, India and China. 

Investing in Frontier Markets also offers your portfolio some serious diversification. 

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For those interested we have the iShares MSCI Frontier 100 ETF on the platform which is the largest Frontier Markets ETF with over $500m in assets. You can find this under the following title...

iShares MSCI Frontier 100 ETF_20190408_10.33.png

 

If you would like any other asset on the dealing platform, please feel free to make a request on Community, or on this post specifically if the asset relates to FMs. 

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@JamesIG,

Many thanks for this. 

I just had a quick search using the keyword 'Frontier' and found the following available on IG's UK Spread Betting platform.

Aberdeen Frontier Markets Investment Co Ltd

Jupiter Emerging & Frontier Income Trust PLC

BlackRock Frontiers Investment Trust PLC

iShares MSCI Frontier 100 ETF

 

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Posted (edited)

Something to bear in mind for Frontier Markets investing is that they are not developed markets and nor are they emerging markets. They are very high risk and this must be taken into consideration from a risk/reward perspective. For me the strongest case for going long on Frontier Markets is based on their potential for future growth.

If one does not believe in the potential future growth of Frontier Markets then I would strongly suggest staying well away from investing in them. Those that do and have a very long term view then they may want to consider allocating a small proportion into their investment portfolios. 

To me Frontier Markets now are where Emerging Markets were over 20 years ago or possibly even longer. 

Some of the Frontier Market investment funds such as OEICS and Unit Trusts that you may wish to consider are:

Templeton Frontier Markets Fund

Barings ASEAN Frontiers Fund

Barings Frontier Markets Fund

Schroders ISF Frontier Markets Fund

@JamesIG, not sure if IG offers these funds within the Shares account / ISA's?

Edited by TrendFollower

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Unfortunately not. We are unable to offer  Fund of this nature. 

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@JamesIG,

I would be interested in seeing what the performance returns are like when conducting a 'compare and contrast' exercise in relation to all Frontier Market investment funds, trusts, ETF's, etc.

I do not know whether this could be included in the next Frontier Market analysis piece that any IG Analyst posts going forwards?

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Saw this go through this morning, a bullish chart pattern setting up for ishares MSCI Frontier 100 Index etf (fm).

image.thumb.png.33bc536b18e6f259f49ff979e2be970b.png

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Those who are interested in investment in Frontier Markets may find the information below useful. 

MSCI FRONTIER MARKETS INDEX (USD)

f9354b32-04ac-4c7e-b76e-460848afe026

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If you look at the chart a couple of weeks ago and now look at today's 'daily' chart then you can see that some positive price action and trend forming.

805085202_iSharesMSCIFrontier100ETF_20190710_19_28.png.18eb6ccc8a1f96d81b00465099968bc9.png

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I just thought some of you may be interested in the following fairly recent articles in relation to Frontier Markets. 

Hidden gems: Exploring frontier markets

https://www.investmentweek.co.uk/investment-week/feature/3077243/partner-insight-hidden-gems-exploring-frontier-markets

Top Emerging Bond Manager Sees Payoff in Frontier Markets

https://www.bloomberg.com/news/articles/2019-07-02/top-emerging-bond-manager-sees-payoff-in-frontier-amid-trade-war

 

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I just thought I would take this opportunity to share the following articles which are nicely related to this thread. 

Emerging markets of the future - exploring new frontiers

https://www.hl.co.uk/news/articles/emerging-markets-of-the-future-exploring-new-frontiers

Frontier Stocks Look Inexpensive, Could Get Some Help From Fed

https://www.etftrends.com/alternatives-channel/frontier-stocks-look-inexpensive-and-could-get-some-help-from-the-fed/

Investing in Frontier Markets in my personal opinion should be a long term investing strategy for those with a higher risk tolerance. I would not recommend or suggest investing in Frontier Markets for those who do not take the time in researching this niche market. 

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