Investing in Frontier Markets – Opportunity, Risk and Role in an Investment Portfolio

Acknowledgments ix
<p>Foreword xi</p>
<p>CHAPTER 1 Introducing Emerging and Frontier Markets 1</p>
<p>Emerging Markets 2</p>
<p>Frontier Markets 11</p>
<p>CHAPTER 2 Frontier Markets by Region 19</p>
<p>Measures Used in this Chapter 21</p>
<p>Asia 24</p>
<p>Africa 34</p>
<p>Eastern Europe 42</p>
<p>Latin America 49</p>
<p>Middle East and North Africa (MENA) 56</p>
<p>Exotic Frontier Markets 61</p>
<p>CHAPTER 3 Volatility: Not the Same as Risk 71</p>
<p>Lessening Volatility in Emerging and Frontier Markets 72</p>
<p>Correlations to Other Markets (and Lack Thereof) 73</p>
<p>Structural Reasons for Higher Volatility 74</p>
<p>CHAPTER 4 Solid Investment Information vs. Media Images 79</p>
<p>The Middle East: Not All in Conflict 81</p>
<p>Vietnam: A Long–term Bet 87</p>
<p>Kenya: A Slow Reduction in Risk 90</p>
<p>Kazakhstan: Borat Painted the Wrong Picture 93</p>
<p>Bangladesh: Not a Basket Case 96</p>
<p>Serbia: A Promising Candidate 100</p>
<p>Sierra Leone: No Longer War Torn 103</p>
<p>Conclusion 105</p>
<p>CHAPTER 5 Economic Strengths of Emerging and Frontier Markets 107</p>
<p>Returns from Emerging Markets 107</p>
<p>The Lack of Correlation between GDP Growth and Equity Returns 109</p>
<p>CHAPTER 6 Past Emerging Market Upheavals and What They Can Teach Frontier Market Investors 115</p>
<p>Argentinean Default of 2001 116</p>
<p>Mexican Devaluation of 1995 118</p>
<p>Asian Meltdown of 1997 98 122</p>
<p>Russian Debt Default of 1998 125</p>
<p>Brazilian Devaluation of 1999 128</p>
<p>The Place of Fixed Income in the Emerging and Frontier Equation 130</p>
<p>CHAPTER 7 The Global Investment Landscape: Why Developed Markets Appear Unattractive at Present 137</p>
<p>Canada 140</p>
<p>The United States 143</p>
<p>Europe 147</p>
<p>CHAPTER 8 Online Trading in Emerging and Frontier Markets and Why It s a Bad Idea 153</p>
<p>The Dangerous Appeal of Going It Alone 153</p>
<p>The Risks of Online Trading 155</p>
<p>Professional Advisors and Online Trading 160</p>
<p>CHAPTER 9 The Changing Role of Financial Advisors 163</p>
<p>Responding to Increased Challenges after the Financial Crisis of 2008 09 163</p>
<p>Accepting Volatility 165</p>
<p>Coping with Increased Reliance on Financial Advisors 167</p>
<p>Convincing Hesitant Clients 172</p>
<p>CHAPTER 10 Different Ways to Invest in Frontier Markets: ETFs, ADRs, Local Stocks and Closed–end Mutual Funds 179</p>
<p>Exchange–traded Funds 180</p>
<p>Regional Funds 184</p>
<p>Sector Funds 187</p>
<p>Single–country Funds 188</p>
<p>Multinational Companies with Large Emerging Market Exposure 189</p>
<p>Frontier Market American Depository Receipts 214</p>
<p>Global Frontier Funds 216</p>
<p>Conclusion 227</p>
<p>Appendix: Frontier Market Open–end Funds as of May 2013 231</p>
<p>Global Frontier Funds 231</p>
<p>Emerging European Ex–Russia Funds 232</p>
<p>African Funds 232</p>
<p>Middle East and North Africa (MENA) Funds 233</p>
<p>Index 235</p>