Investors Seeking New Frontier Markets After BRIC Disappointment

As investors dump emerging-market equities at an unprecedented clip, they’re turning more and more to frontier markets in search of the next growth story.

No exchange-traded fund focused on developing nations has grown faster in the past year than BlackRock Inc. (BLK)’s iShares MSCI Frontier 100 fund, whose biggest holdings are in Kuwait and Qatar. Assets under management surged nine-fold to $581 million, fueled by $458 million of inflows and returns of 22 percent. In contrast, BlackRock and Vanguard Group Inc.’s flagship emerging-market exchange-traded funds have seen investors pull a record $26 billion in the period, according to data compiled by Bloomberg. The MSCI BRIC Index is down 5.4 percent this quarter, even as it is poised for its best week of gains this week.

While Brazil, Russia, India and China led the global economy out of the 2008 financial crisis, investors have been fleeing the biggest developing nations as their growth sputters. The Hang Seng China Enterprises Index is in a bear market, Brazil suffered its first credit-rating cut in a decade, and Russia is facing international sanctions for its Crimea takeover. Stocks are rallying, meanwhile, in places like Kenya, where oil discoveries are stoking growth, and Vietnam.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu