As Emerging Markets Get Pricey, Frontier Zone Could Pick Up

* username: rupertbu

It's been a tough ride for equities in far-flung frontier markets since their heyday in 2007, and even as global stocks shoot up, it's going to take time for money to come back to this asset class.

Traditionally seen as the riskiest areas within the emerging markets spectrum, frontier market stocks, as tracked by MSCI, have gained about 21% in the last year. The MSCI Emerging Markets measure, meanwhile, has more than doubled.

The numbers highlight the fact that even as investors look for access to the developing world, they haven't been willing to take on the extra risk tied to these fringe markets. That could change as money continues to flood into larger emerging markets, prompting fears of high valuations and talk of asset bubbles.

"Right now, there is still enough growth to be had in emerging markets, but as they get more and more overpriced, investors may start looking elsewhere," said Wasif Latif, an equity portfolio manager at USAA Investment Management.