Sunday, August 10, 2008

Frontier funds coverage heating up

Frontier funds are in the news again, this time being covered by Money magazine (see my previous posts on the topic here and here.

Enter the newest fad: frontier funds. They go to places that may have barely functioning stock markets and shaky governments but often have astounding growth rates. Côte d'Ivoire's market spiked 122% in 2007. Namibia's rose 63%.

Within the past year, three funds specializing in frontier stocks have launched: T. Rowe Price Africa & Middle East, Fidelity Emerging Europe, Middle East, Africa and Claymore/BNY Mellon Frontier Markets, an ETF. And more are on the drawing board.

The T. Rowe Price fund and the Claymore/BNY fund were in some previous articles I cited in my old posts. The Money story goes on to point out some rather big risks in investing in frontier markets, and questions whether the individual investor has the stomach for the 50% swings that can happen in these markets.

The emerging markets are still tiny, with only a $191 billion market cap according to the story, so they have a lot of room to grow. But now that the mainstream media is covering these markets more and more, is it really the right time to invest, or is it a sucker's bet now?

1 comment:

  1. Thanks for the info. I also found this site which gives a little more on frontier market investments.