There are many risks associated with frontier markets, but there may be even more reward for investors. Compared to the popular emerging markets, frontier markets are even higher on the risk-reward scale. It is a smart move for investors now to make a move to invest some of what is already invested in emerging market into frontier markets, generating more diversification for their portfolio and to generate higher growth potential.
As you can see from globalEDGE's emerging market and frontier market pages, there is only a slight difference between which countries qualify under each market. There are a few factors that distinguish the two, such as size, level of development, liquidity, standard of living, progress of government institutions, and infrastructure. Compared to the $500 billion invested in emerging markets, currently there is only $5 billion invested in the frontier markets.
The Federal Reserve interest rate hike has had an effect on the emerging and frontier markets. A more aggressive Fed acts as a catapult for emerging and frontier market assets. More information regarding the Federal Reserve interest rates is available in an earlier globalEDGE blog post. The Federal Reserve either having a looser or tighter monetary policy has a significant impact over the emerging and frontier markets.
To understand and learn more about emerging markets and frontier markets, globalEDGE has an assortment of information available for users, including statistics, risk comparators, and resources. Whether for investing purposes or for general information, globalEDGE provides a variety of knowledge and useful facts.