Ah, frontier markets - exotic countries, daring investments and spectacular returns. That’s the theory, but many investors gave up on it during the financial crisis, sending stocks tumbling as they withdrew their funds.
Now the frontier bulls are back, but investors are faced with limited opportunities - or endless legwork. Two of the very few exchange-traded funds that claim frontier appeal - the Claymore/BNY Mellon Frontier Markets ETF and the Powershares MENA Frontier Countries Portfolio - actually have a fairly conservative approach. Instead, when it comes to frontier markets, private equity continues to lead the way.
As Elaine Moore points out in this week’s FTfm, the debate over what constitutes a frontier market means meaningful data are hard to obtain. But the Emerging Markets Private Equity Association reported in August that private equity investment in emerging markets overall had risen to $13bn in the first half of 2010, up from $8bn the previous year.
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