There is a new world of investment opportunity lying beyond the usual international options that have become all too familiar. Investors have been inundated with information about emerging markets like Brazil, Russia, India and China, while future bright spots including the Middle East, Nigeria and Vietnam have been largely ignored.

Asset management firms like T.Rowe Price (Nasdaq:TROW) and Merrill Lynch (NYSE:MER) are creating funds and indexes covering these forgotten territories.

What are Frontier Markets?
Frontier markets are countries or regions where political instability and economic security have lingered for decades.

Interest in frontier markets is tied to their potential for infrastructure development, commerce and modernization, which are the same qualities that attracted investors to the emerging market several years ago. The growth potential for the frontier markets also presents an opportunity for investors to participate in equities that are non-correlated to U.S. markets.

Real GDP Paints the Picture
Despite having that largest economy in the world at $14 trillion, the U.S.'s real GDP dragged at 2.2% for 2007. The outlook for the U.S. GDP, which is largely driven by the services it provides, is not expected to exceed 2.5% over the next 4-5 years. Meanwhile oil-rich countries like Nigeria reported real GDP of 6.2% last year with an expectation of continued growth at the same rate or higher over the next few years. (To learn more on real GDP, read Macroeconomic Analysis.)

Frontier Market Funds
In September of last year T. Rowe Price introduced its T.Rowe Price Africa and Middle East Fund (TRAMX). The fund was performing well above the performance of the S&P 500 and the MSCI EAFE Index in June when oil prices were setting records near $145. Since oils recent pullback, the fund is basically flat for the year. TRAMX is composed of mostly financial services and industrial companies in Qatar, the United Arab Emirates, Egypt and South Africa.

In March, Merrill Lynch launched a Frontier Index composed of 50 stocks from 17 countries in Europe, the Middle East, Africa and Asia.

In June ETF provider Claymore Securities launched the first frontier ETF named the Claymore/BNY Mellon Frontier Markets ETF (NYSE:FRN). FRN focuses on stocks in Eastern Europe, Asia, Africa and another important region that we have not yet mentioned, Latin America.

Conclusion
The social, religious, political and economic risks of investing in frontier markets are many, but the growth story and potential of these regions cannot be denied. I'm not recommending you jump right in and invest, but if you didn't know which rising economies were on the investment horizon at least now you've been exposed to the frontiers beyond the usual emerging markets.

Find out how these worldly offerings can spice up your portfolio in our article Go International With Foreign Index Funds.

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