Markets: Money from the leftovers
Investing in frontier markets, which are less established than emerging ones, was very profitable until recently
SA investors might be familiar with shares on our continent such as Safaricom in Kenya, Zenith Bank in Nigeria and Delta Corp in Zimbabwe. These are some of the better-quality names in what are now called the global frontier markets. Across the world there are markets at a similar stage of development, with the same (il)liquidity and often similar GDP per capita. Over the past 14 years the frontier markets have returned 450%, or 12.9% compounded annually, ahead of both emerging markets (310% or 10.5% annually) and developed markets (175% or just 7.4%). But, more recently, life has been tougher on the frontier. The Templeton Frontier Markets Fund, the most widely distributed fund in the sector, has lost 3.75%/year over the past three years.
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