The frontier has always represented opportunity for Americans. Opportunity … and risk.
On the investing landscape, frontier markets can provide the same leading — and sometimes bleeding — edge to investors looking for high-risk/-return scenarios.
These are the markets not yet big enough to qualify as emerging markets. Research firm MSCI includes 24 countries in its MSCI Frontier Markets index, ranging from Argentina (a former emerging market) and Nigeria to Kuwait and Kazakhstan. They generally have a lot of political risk; can often be vulnerable to commodity prices, cultural and environmental issues; and typically have very thin capital markets. They also have great prospects for growth.
If you have long-term investment horizon and can deal with a lot of volatility, frontier market funds can offer some potentially big returns, financial experts explain.