Outward, Ho!

There’s another place to invest: the frontier.

Frontier markets are emerging markets that are “out there.” They’re developing markets that are smaller, less liquid, less regulated, and more volatile than the BRICS. They include places like Bangladesh, Kenya, and Romania.

Emerging markets like Brazil or China were once considered exotic, but now they’re home to some of the largest companies in the world. Their economies are large and diverse, and their politics have matured. Twenty years ago they were exotic. Now they are an increasingly mainstream investment.

But the frontier subset is still on the fringe. They’re subject to military coups and regional wars; corruption and insider dealing can be an issue; and their markets are extremely small: often only a handful of companies are available in any one country.

So why invest there? Because they offer significant growth, an expanding middle class, and extremely low valuations. They’re also less correlated with the US. So a small slice can improve a portfolio’s return without significantly increasing its risk.

But they’re not for everyone. Wars, trade wars, and contagion are not uncommon. For long-term, growth-oriented investors with steely nerves, however, these high-risk markets could be highly rewarding.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

direct: 603-252-6509
reception: 603-224-1350

www.chartertrust.com • www.moneybasicsradio.com • www.globalmarketupdate.net
By | 2014-09-11T09:36:58+00:00 October 20th, 2011|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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