Investing in Emerging and Frontier Markets

The video discusses the potential of frontier markets as investment opportunities, highlighting their lower volatility and unique characteristics compared to developed and emerging markets. Despite lower foreign participation and tighter restrictions, these markets can be havens during volatile periods. The performance of frontier markets has been mixed, with various idiosyncratic factors influencing returns, including economic shifts, trade wars, and oil market volatility.

Why might frontier markets be considered attractive despite their challenges?

• They are larger than emerging markets.

• They have fewer ownership restrictions.

• They are less volatile during uncertain times.

• They have high foreign participation.

What is a characteristic of the volatility in less developed nations?

• They have outperformed developed markets.

• They have shown consistent high volatility.

• They are highly correlated with each other.

• They are less correlated with each other.

How have frontier markets performed compared to emerging markets in recent years?

• They have not been compared to emerging markets.

• They have shown equal performance to emerging markets.

• They have underperformed emerging markets.

• They have consistently outperformed emerging markets.

What are some factors driving returns in frontier markets?

• Stable political environments.

• Consistent oil prices.

• Economic shifts due to trade wars.

• High foreign investment.

What is a challenge in identifying the causes of returns in frontier markets?

• The markets are too small to analyze.

• There are many idiosyncratic factors.

• The factors are well-documented.

• There is a single clear factor.