Why to Invest in Frontier Markets

Frontier markets have made gains this year of over 20%, but their emerging counterparts are down 3%. So is this a breakout year for the asset class? 

BlackRock 20 December, 2013 | 10:02AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Sam Vecht, manager of the BlackRock Frontiers Investment Trust plc, thinks this is a breakout year for frontier markets.

The final frontier? The holy grail for investors has long been to be among the first to identify a long-term investment trend. Twenty-five years ago, that meant emerging markets, as they liberalised their economies and embraced globalisation, sparking tremendous growth rates and helping living standards improve for millions of citizens. Since then, they have evolved into a mainstream investment destination.

We now believe that frontier markets are poised to benefit from those same processes of development. They comprise a large number of countries that have less developed economies and financial systems than emerging markets but are, nonetheless, ‘investable’. Whether a country is classified as ‘frontier’, ‘emerging’ or ‘developed’ depends on the breadth of the investment opportunities it offers, how liquid its markets are and the degree of access it provides to foreign investors.

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BlackRock  has assets under management totalling $3.8 trillion across equity, fixed income, cash management, alternative investment, real estate and advisory strategies (as at 31 December, 2012).

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