Middle East Fund Has Its Quirks, Perks

Since that correction in 2006, the region has again skyrocketed. Egypt is down 20% since mid-May. Kuwait rallied 30% from early December through late June and is down only 3% from its peak. Given what is going on in the world equity markets, it makes sense to wonder whether Kuwait turns out to be an exception or simply hasn't gone down yet.

The long-term potential benefit to the frontier asset class is that it tends to be less volatile than emerging markets and has a low correlation to emerging markets, yet delivers a similar return as emerging markets.

As for a verdict on the fund, I will be more favorably disposed once the P-note issue has been resolved. Clearly the region is compelling, it makes intuitive sense that the GCC countries will continue to be increasingly more relevant to the global economic order which stands to mean good things for the stock markets there.

One last word of caution: Despite the data about volatility available on the PowerShares site and elsewhere about frontier markets, recent history suggests that there will be a lot of volatility along the way.