Standard & Poor’s has launched the S&P Select Frontier Index, which will invest in 30 of the largest and most liquid companies in frontier markets, including emerging Europe, Asia, South America and the Middle East. It is a subset of the S&P Extended Frontier 150 Index.
At its launch, the S&P Select Frontier Index includes companies from Bulgaria, Cambodia, Columbia, Jordan, Kazakhstan, Pakistan, Panama, United Arab Emirates and Vietnam.
Frontier markets are attracting investors’ attention because they have the ability to deliver stronger returns than in developed nations, said Alka Banerjee, vice president of S&P’s index services.
“Liquidity has increased tremendously in frontier markets since 2001, as restrictions on foreign investment have been relaxed and returns have outpaced both developed and emerging markets over the last decade,” Banerjee said. “Less correlated to global economic cycles than their more developed counterparts, the combination of accelerating economic growth, increased government focus on privatizations and heightened IPO activity provides an attractive investment environment for those seeking alpha and diversification benefits.”