Investing in Emerging and Frontier Markets

At one time, U.S. investors had limited opportunities to invest in companies that were based overseas. But today international investing is common, with investors buying stakes in firms across most of the world, either directly or through mutual funds or exchange-traded funds (ETFs). The chance to invest in formerly inaccessible developing markets offers fresh opportunities as well as risks.Before deciding to invest in developing markets, first consider whether you want to participate in emerging or frontier markets. Emerging markets are markets that have experienced considerable growth and appear well on their way to transitioning from developing to developed. They feature some (but not all) characteristics of developed markets, such as liquid equity and debt markets, a relatively stable currency and banking system, a reliable regulatory environment, increasing growth and per capita income, and good access for foreign investors.Frontier markets are also making the journey from developing to developed, but they haven't progressed as far as emerging markets. Frontier markets have greater perceived exposure to market volatility, less liquidity and, in some cases, political instability. Their legal and accounting standards might also be lower. These markets will likely have fewer large, stable companies available for individual investment; country-focused funds might be more readily available to investors.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool