Frontier Market Investing: What’s the Value Add?

We propose that this chapter will assess the value of frontier markets from an investment perspective. The work we have already completed using a regime switching model in this area will be utilized, showing evidence that the value add of frontier markets is to improve the level of risk-adjusted returns while the extreme correlation of frontier markets in both bear and bull markets also has a positive effect on the overall investment. The growth projections of frontier markets, coupled with the lowering of international regulatory and liquidity constraints, suggest this is an area required for consideration in a client portfolio. We are happy to provide the work that we have already completed in this area as a contribution to the book.