Frontier Markets: The Four Elements
The case for frontier equity markets rests on the four pillars of history, globalization, diversification and optimism.
If the world is becoming a better place, then conditions in frontier countries will continue to improve. We believe this improvement will be gradual rather than dramatic, measured by years and decades. Over time, it will lead both to better living conditions and to rewarding investment opportunities.
This optimism does not require us to believe that the United States, Europe or Japan will continue to lead the world. In fact by demographic measures, the trends in most developed countries are quite unfavorable. But frontier countries have strong demographics, with young people becoming more productive each day.
We can not predict which countries will succeed or which will fail (much like the difficulty of predicting venture capital investments), but we believe that the typical frontier country will do quite well. Much of this will be due to globalization, where the full impact of changes already in place is yet to be appreciated.