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There's an ETF for that! Frontier Markets

There's an ETF for that! Frontier Markets

You've probably heard of emerging markets before, but have you heard of frontier markets?  Frontier markets are less developed than emerging markets.  In fact, sometimes they are referred to as "pre-emerging markets".  Countries that are classified as frontier markets are either smaller countries with high development but still considered too small of relatively high development level (such as Estonia) that are too small to be considered emerging markets, countries with investment restrictions that have begun to loosen over the past 10-20 years, or just countries at a lower development level than the existing "mainstream" emerging markets.

Countries that are considered frontier markets include: Argentina, Bahrain, Bangladesh, Botswana, Bulgaria, Croatia, Estonia, Ghana, Jordan, Kazakhstan, Kenya, Lithuania, Nigeria, Oman, Romania, Slovenia, Sri Lanka, Tunisia, and Vietnam.

Obviously, there are a lot of risks investing in frontier markets, but there is potentially a lot of reward as well.  Below are some ETFs that invest in frontier markets. There are some country-specific funds, but we've only included the broader-based funds.  We've listed the tickers, names and expense ratios of the funds to consider:

  • EMFM   Global X Next Emerging & Frontier                 0.55%
  • FRN       Invesco Frontier Markets                                   0.70%
  • FM         iShares MSCI Frontier 100                                0.79%

Frontier market funds should not be a core holding due to their concentration / non-diversification. As with any specialty fund, make sure you understand the methodology and do your your due diligence.