Invest in the Middle East -- but Not With Oil

As I mentioned in my recent article about PMNA, the back-test probably is not that important.

I believe the decision about which one is likely to outperform will boil down to whether or not the GCC states will continue to their path to being more relevant to the world economic order. If so, I would expect MES to be the better choice.

The weights to Egypt and Morocco will either be a drag in that light or will help GULF outperform, in case investing in the GCC countries turns out not to be a one-way trade.

The Middle East not being a one-way trade is something to weigh carefully. In the first half of 2006, most of the region endured a 50% correction. Currently, most of the region is dealing with high and increasing rates of inflation. The asset class -- frontier markets -- is viable, but any allocation should be moderate.