After several tough years, things have been looking more positive for investors in emerging markets over the last couple of years, with the region outperforming its developed market peers in both 2016 and 2017.
Frontier market funds are leading Europe’s emerging market fund pack with Charlemagne’s frontier market offering at the top, according to FE Analytics.
Frontier market equities saw the largest net inflows for a very long time in June, suggesting the interest in developing economies’ stock markets is broadening.
With a string of countries having been promoted from frontier markets to emerging market status by index provider MSCI in recent years, investors need to ask themselves the question: are frontier markets still a viable asset class? And if they aren’t, is that actually a problem?
With more of a shudder than a surge, Pakistan formally returned to the MSCI emerging markets index on Wednesday after nine years as a frontier market, a day after foreign investors sold up in the biggest net outflow since July 2013.
VARP is the latest hot EM acronym. GAM’s Tim Love explains why the combination of Vietnam, Argentina, Romania and Pakistan is such a compelling investment case right now.
Frontier markets tend to have a low correlation with other markets and are relatively insulated from disruptive global events. The asset class could therefore be a good diversifier.
Iran-focused asset management and private equity group Griffon Capital is quick to take advantage of the lifting of sanctions on Iran. It has launched the Cayman Island-domiciled Griffon Iran Flagship Fund to tap into Iran’s public equity market.
Saudi Arabia has reportedly withdrawn tens of billions of dollars from global asset management firms in response to the ongoing slump in oil price and the recent volatility in world equity markets.
Volatility in frontier market equities has been quite extreme over the past couple of months, but to what extent has this turbulence affected investor sentiment?