What Are Frontier Markets and Why Invest in Them?

If emerging markets are the wild child of the investment family, offering potentially higher rewards in return for greater risk, then what about their smaller sibling, frontier markets?

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Evidence on records show that early entrants in frontier markets could reap relatively better returns than investments in the other markets with the right risk management tools in place. This has been the case for foreign direct investments, for example, in Vietnam and Pakistan.

Whilst the frontier market is shrinking, there are still a lot of opportunities for the sophisticated investor who employs both the art and science of risk management to his full advantage tempered with political risks insurance made available through the state insurers or the private sector insurers.

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