Why Frontier Market ETFs Are Not As Risky As You Might Think

As investor confidence in developed markets has waned in recent months many have taken their dollars abroad in an attempt to buy into high growth emerging markets overseas. While a good chunk of this cash has piled into the BRIC countries and other large emerging markets such as Indonesia, some have taken a different route and have put the frontier market ETFs under the microscope. However, investors who think that these funds are at the top of the risk spectrum for international equities may be extremely disappointed if they take more than a cursory glance at the funds’ top country allocations. By popular definition, frontier markets are known as “pre-emerging markets” and may face any or all of the following risks; political instability, poor liquidity, inadequate regulation, substandard financial reporting and large currency fluctuations. In addition, many markets are overly dependent on volatile commodities. While this can create opportunities for investors [...] Click here to read the original article on ETFdb.com. Related Stories: Closer Look At Frontier Market ETFs The Next “Frontier” in ETF Investing Van Eck Debuts Local Currency Emerging Market Bond ETF (EMLC)