MARKETS

 

Why Invest in Frontier Markets?

The case for equity investing in frontier markets draws from multiple factors: strong historical precedent, the power of economic globalization, the compelling diversification benefits demonstrated by frontier investments, and the unbridled optimism and entrepreneurial spirit of the people who live and work in these countries.

Why invest in frontier markets? Here are just a few reasons:

Frontier Markets are Young

The demographics of frontier market populations are tilted more toward the workforce than the retirement home, as seen in developed and emerging markets. These characteristics point to potential for productivity growth and expanding consumer classes -- the stuff investment returns are made of.

Frontier Markets Act Differently

Stock market return patterns in frontier markets don't parallel those of the rest of the world. In fact, return patterns from country to country on the frontier show low correlation to each other, providing investors excellent potential to diversify any portfolio.

Economic Development has Proven a Powerful Return Engine

The ability of economic development to generate investment return has proven efficacious in the world's emerging markets, from the rapid growth of the Asian Tiger economies of the 1980s to the advances in Chile, Israel, and Brazil in the 1990s to the ascent of China and India in more recent years. Frontier markets tread this same path to development.

Life is Getting Better Faster for People in Frontier Markets and this Positive Change is Fueling Optimism

People in developed markets do not necessarily believe life will be better for themselves and their children in the future. People in frontier markets have little doubt that their quality of life will improve and they are motivated to work hard to augment the change.

A Flatter, Shrinking World is Rapidly Delivering Benefits and Opportunities to Frontier Markets

Many business owners, workers, and consumers in frontier markets will never know a landline phone or fax machine. Leapfrogging technology is bringing incredible depth of information and power to the shirt pockets and fingertips of emerging entrepreneurs on the frontier.

Frontier Markets are Inefficient

For all of the modernity arriving on the frontier, investment information on the perimeter still needs to be retrieved through human sources, site visits, and traditional analysis. This means greater potential for investors who are able to enlist the resources of a focused and experienced professional team.