This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Mutual Funds Open Door to Frontier Markets

NEW YORK ( TheStreet) -- After Dubai said a state-controlled company would have to reschedule debt, stocks around the world shuddered. In recent days, most stock markets have recovered, but the incident served to highlight the risks and opportunities in countries known as frontier markets.

Those are the smaller and less-developed countries in the emerging markets. While most emerging-markets mutual funds are dominated by major countries, such as Brazil and China, the MSCI Frontier Markets Index includes such economies as the United Arab Emirates, Sri Lanka and Ukraine.

A growing number of mutual funds have been focusing on frontier markets. What attracts investors is the chance to make early bets on economies that seem poised to grow. "The frontier markets look very similar to the way the major emerging markets appeared 10 years ago," says Donald Elefson, manager of Harding Loevner Frontier Emerging Markets (HLFMX).

A decade ago, it took guts to invest in an emerging-markets mutual fund. At the time, Russia was struggling to recover from a full-blown financial crisis, while Brazil labored to control roaring inflation. Since then, many emerging markets have put their financial houses in order and welcomed foreign investors. The resulting boom has made emerging markets one of the best-performing investment categories. During the past 10 years, diversified emerging-markets mutual funds have returned 10.9% annually, compared with a decline of 0.9% for the S&P 500 Index of the biggest U.S. companies, according to Morningstar.

Can frontier stocks repeat the success of major emerging markets? That's hard to know, but some signs are promising. At a time when forecasters are predicting sluggish growth for 2010 in the developed world, economists expect to see growth rates of more than 5% in many frontier countries, including Qatar, Nigeria and Vietnam.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs