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Frontier markets no riskier than emerging markets

According to new Research Foundation of CFA Institute book, Frontier Market Equity Investing: Finding the Winners of the Future, valuations are more attractive and, therefore, opportunity for future returns is greater in frontier markets.

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The latest publication from the Research Foundation of CFA Institute [1], Frontier Market Equity Investing: Finding the Winners of the Future argues that the risk of investing in frontier markets is no greater than the risk in many markets that are considered to be emerging. According to the publication, valuations are more attractive and, therefore, opportunity for future returns is greater in frontier markets.

This latest publication from the Research Foundation can be viewed as a call to action for investors to not underestimate the potential of frontier markets. Many frontier countries have undergone a radical restructuring of their economies since the early 1990s, and, from an economic standpoint, frontier market countries are emerging rather than stagnating. Frontier markets can provide investors with a wealth of opportunities to identify stocks that have been ignored by the mainstream investment community.

“This latest Research Foundation book touches on the many investment opportunities that exist in frontier countries,” says Lawrence Speidell, CFA, author of the publication. “Included in the book are reviews of the stock markets, the listed companies, the potential returns, and the diversification benefits, as well as economic and political fundamentals. I hope that this effort provides support for those who are currently investing in these markets and encouragement for those who are contemplating doing so.”

“Looking ahead, these markets may represent the final frontier for global capital,” states Bud Haslett, CFA, executive director of the Research Foundation and head of Risk Management & Derivatives. “As the emerging markets of today move on to become part of the developed world, the stage is set to bring along a new set of emerging candidates from the frontier markets.”

Next Finance , October 2011

Article also available in : English EN | français FR

Footnotes

[1] About The Research Foundation of CFA Institute
The Research Foundation of CFA Institute is a 501 c.3 nonprofit organization whose mission is to provide in-depth, high quality, independent investment research to the global investment community. The Research Foundation’s audience is anyone with a serious interest in investment finance. The research is oriented to the practical application of investment finance. Potential research topics cover all fields of investment though particular emphasis is given to topics that have significant practical importance to the investment community and that have not been discussed in-depth or effectively communicated to the Research Foundation’s audience.

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