Expert investors and analysts have been saying it for years: Economies in the emerging markets have become so sophisticated that the so-called frontier markets are becoming the place to find richer yields.

Russell Investments launched an index group that investors can use as a benchmark for holdings in their portfolio. The company, based in Tacoma, Wash., launched the index group last week. The Russell Frontier Index will initially include 683 stocks from 41 countries, none of which are represented in the Russell Emerging Markets Index or Russell Developed Index.

The new listings will kick off with the Russell Frontier Large Cap Index, the Russell Frontier Small Cap Index, and the Russell Frontier ex-GCC Index. The benchmarks are float-adjusted and represent 98% of cumulative, liquid market capitalization of the frontier countries.

Interest in the so-called frontier markets have increased lately, mainly as companies from the emerging economies have started to march close to lock step with the developed world. The wrinkle in that situation is that their securities trade more like developed market ones, which diminishes their negative correlation.

“Portfolio management, and diversification, becomes more challenging,” according to Steve Wood, a chief market strategist for Russell Investments. “Investors want to be able to identify and verify the relationships between different asset classes and opportunities.”

Investors are looking for standout companies in regions that are characterized by limited market accessibility, small company size and low liquidity, according to Russell Investments. Those operating conditions have improved, as restrictions on foreign investment have eased, and the markets have become more investable.

The Russell Frontier Index offers broad coverage of African countries, including Nigeria, Kenya, Mauritius, Tunisia, Togo, Senegal, Botswana, Ghana, Namibia, Gabon, Tanzania and Zambia. Africa is considered by many frontier managers to be a key market that has, until now, been under-represented by existing frontier indexes, according to Russell. Nigeria, for instance, is a key frontier market economy. It has the world’s tenth largest oil reserve, Russell says, citing the CIA, and is a member of the Organization of the Petroleum Exporting Countries. To the relief of foreign investors, its main oil-producing region, the Niger Delta, is stabilizing, and the country has had several democratic transfers of power. Elsewhere on the continent, says Russell, Ghana is the world’s second-largest cocoa grower, after the Ivory Coast, and it is the continent’s second-largest gold producer after South Africa.

But opportunities abound in other countries, too. Vietnam has become a manufacturing and outsourcing destination for China.

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