Frontier Markets

AAA

DEFINITION of 'Frontier Markets'

Less advanced capital markets from the developing world. Frontier markets are countries with investable stock markets that are less established than those in the emerging markets.

They are also known as "pre-emerging markets".

INVESTOPEDIA EXPLAINS 'Frontier Markets'

The frontier, or pre-emerging, equity markets are pursued by investors seeking potentially high returns who are able to accept the higher risks these type of markets would be exposed to. Some of the risks investors face in these frontier markets are political instability, poor liquidity, inadequate regulation, substandard financial reporting and large currency flucuations. In addition, many markets are overly dependent on volatile commodities.

Frontier market investments can have a low correlation to developed markets and thus can provide addtional diversification to an equity portfolio.

RELATED TERMS
  1. Newly Industrialized Country - ...

    A term used by political scientists and economists to describe ...
  2. Spice Trader

    A slang term used to describe an investor who tends to trade ...
  3. Emerging Market Economy

    A nation's economy that is progressing toward becoming advanced, ...
  4. Emerging Market Fund

    A mutual fund or exchange-traded fund that invests the majority ...
  5. Country Risk

    A collection of risks associated with investing in a foreign ...
  6. Political Risk

    The risk that an investment's returns could suffer as a result ...
Related Articles
  1. Investing Basics

    Broadening Your Portfolio's Borders

    Find out what type of international fund might suit your needs in gaining exposure to foreign markets.
  2. Fundamental Analysis

    An Evaluation Of Emerging Markets

    Get the full story on this asset class before you write it off as too risky.
  3. Economics

    What Is An Emerging Market Economy?

    Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors.
  4. Economics

    Forging Frontier Markets

    Pioneering is never easy, but it has its exciting - and worthwhile - moments for investors.
  5. Investing

    How To Trade Foreign Stocks

    We weigh the major ways to trade foreign stocks for investors.
  6. Economics

    Vietnam -- New Asian Hot Spot For Tech Investment

    Vietnam now has a rapidly expanding tech sector that's attracting investors from around the globe due to low business costs and highly skilled workers.
  7. Mutual Funds & ETFs

    Want Emerging Market REIT Exposure? Eye These ETFs

    It's possible (and easy) to invest in emerging market real estate from the United States — just look at these REIT ETFs.
  8. Economics

    Oil Investments Boost Egypt's Recovery Prospects

    Major foreign oil companies have provided a big boost to the Egyptian economy by agreeing to invest around US$17 billion in the country's energy sector.
  9. Investing

    China's Silicon Valley: Zhongguancun

    Just like in the US, several of China's leading tech companies are headquartered in one spot. China's Silicon Valley is Zhongguancun, and it's growing.
  10. Forex

    The Worst Performing Currencies Of 2015

    The U.S. dollar has strengthened over the past year while weakness in Europe and the former Soviet Union has led to declines in those currencies.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center