The next big thing? Investors switch from emerging to frontier markets

The poor performance of emerging market equities year-to-date has caused investors to turn to frontier markets in search of better returns.

Assets under management in frontier market funds have more than doubled to $3.1bn since the start of the year, according to BofA Merrill Lynch, while EM funds have suffered outflows of $2.1bn. Frontier markets are enjoying a strong year, with MSCI Frontier Markets outperforming both developed and emerging market equities with a return of 14.7% for the year to 20 August, versus 12.1% for the MSCI World and 11.7% for MSCI EM.   Adrian Lowcock, senior investment manager at Hargreaves Lansdown, said underperformance from major Asian markets in particular has led investors to look f...