Investing in Emerging and Frontier Markets

Core Insights - U.S. investors now have broader access to international investments, including emerging and frontier markets, which present both opportunities and risks [1] Group 1: Emerging vs. Frontier Markets - Emerging markets are characterized by significant growth and are transitioning towards developed status, featuring liquid equity and debt markets, stable currencies, and good access for foreign investors [2] - Frontier markets are less developed than emerging markets, facing higher market volatility, lower liquidity, and potential political instability, with fewer large, stable companies available for investment [3] - There are generally more investment opportunities in emerging markets compared to frontier markets, with categorizations varying by index providers like MSCI and S&P [4] Group 2: Evaluating Investment Opportunities - Investors should assess their risk tolerance when considering investments in emerging or frontier markets, as these markets present unique political, regulatory, legal, liquidity, and currency risks [5] - Frontier markets typically exhibit greater risks and potential rewards, including rapid growth and favorable demographics, but risks can vary significantly by country [6]