Frontier Stocks

For most of the last two decades, investors with an aggressive mindset looked at stocks from so-called BRICS countries. That’s Brazil, Russia, India, China and South Africa. With a large percentage of the world’s population and an increasing presence in global markets, these countries are not the new investing options they once were, although their stocks still have a large amount of potential risk and reward.

Introducing Frontier Stocks

Today, frontier stocks are the newest darlings and among the riskiest of the investing world. Developing economies including Vietnam, Bangladesh, Jordan, Slovenia and Argentina, as well as some two dozen other countries, are frontier stocks.

High Risk

Because these frontier countries have even less established economies and markets than BRICS countries do, they pose among the highest risks to investors. First, their markets may not be as carefully regulated as older stock exchanges. Second, corruption, corporate malfeasance and government instability are more likely here than in developed markets.

Take Care

Because these frontier funds are typically more volatile than other types of investments, you may not want to devote more than a small percentage, if any, to them in your portfolio. As an alternative, you might consider investing in funds a step down in risk, like so-called MINT (Mexico, Indonesia, Nigeria and Turkey) equities or BRICS stocks.