The recent introduction of funds focused on the Middle East, North Africa and other developing economies has created a new category of Frontier Markets ETFs.
The investment case is that the Frontier Market economies are where the Emerging Market economies were 20 years ago. They offer undiscovered opportunity and diversification potential due to their low correlation with U.S. equity markets.
The Claymore BNY Mellon Frontier Markets ETF (FRN) tracks an index of ADRs and GDRs of companies in a wide range of Frontier Market economies including Bahrain, Chile, Columbia, Czech Republic, Egypt, Estonia, Georgia, Kazakhstan, Kuwait, Lebanon, Nigeria, Oman, Pakistan, Peru, Poland, Ukraine and United Arab Emirates.
The PowerShares MENA Frontier Countries Portfolio (PMNA) invests in companies in Middle Eastern and North African countries that have smaller economies or less developed capital markets than traditional emerging markets. Countries covered include: Egypt, Morocco, Oman, Lebanon, Jordan, Kuwait, Bahrain, Qatar and United Arab Emirates.
WisdomTree’s Middle East Dividend Fund (GULF) tracks the performance of companies in the Middle East region that pay regular cash dividends. Companies must be eligible to be purchased by foreign investors and incorporated in and listed on a major stock exchange in Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar or the United Arab Emirates.
The Market Vectors Africa Index ETF (AFK) tracks an index of African companies that span 11 countries — from the more developed South Africa, Egypt and Morocco to the frontier markets of Nigeria, Ghana and Zambia.
For more, see Investing in Frontier Markets with ETFs in the ETF Themes guide.