Why You Should Consider Frontier Markets

Investing in frontier markets can offer greater long-term prospects, but understanding the markets is key

Sunniva Kolostyak 28 July, 2021 | 8:56AM
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Ocean in Vietnam

There are about 200 countries in the world (give or take a few depending on whether you ask the UN or FIFA), and of these, 23 are classified as developed markets, 27 as emerging markets, and about 25 are so-called frontiers; smaller, but still investable markets such as Tunisia, Jordan and Sri Lanka.

The biggest difference between frontier and emerging markets is that frontiers are essentially not developed enough yet to be classed as emerging. Indeed, they are sometimes referred to as “pre-emerging markets”. Frontiers usually also have fewer listed companies with less liquidity, and some markets have limits on foreign ownership. 

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Sunniva Kolostyak  is data journalist for Morningstar.co.uk

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