About Emerging and Frontier Markets
Posted on Thursday, October 4th, 2007 | In Investing LessonsI have written about emerging markets plenty of times and frontier markets quite a few times. I believe emerging markets have a place in diversified portfolio and frontier markets should be there for quite a few folks. I wrote about the N-11 in this context in January.
We are moving closer to some sort of US listed exchange traded product. I found this on IndexUniverse about an MSCI Index that also mentions the an S&P frontier market index.
This is going to happen in a more accessible way. I have disclosed exposure to Vietnam, not so easy to access, and there will be more. I think in addition to funds there will be individual stocks available too.
Emerging markets have been hot for several years and despite Michael Kahn’s warning of a correction (which I am not disagreeing with) they will be attractive to US based investors for a while to come.
The point to make for now is one of moderation. I believe I first disclosed owning the Vietnam Opportunity Fund (VTOPF and VOF.L) a little over a year ago. I actually first bought it in the spring of 2006 at around $2.48. I disclosed selling half of it in a video post from January at $4.73. For the very few people I bought it for I only allocated 1-1.5% to it. A 1% allocation to something that goes up 90% adds a lot to a diversified portfolio. Granted it won’t make you rich but it adds meaningfully to your result without taking a huge risk.
I think this sort of smaller exposure makes sense for a lot of people where frontier markets are concerned. I have discussed moderation with regular emerging markets more times than I can link to but during the selloff this summer a lot of emerging market things were 20% or so. When these events happen, a lot of comments come in from people who learn the hard way they had too much.
Last 5 posts by Roger Nusbaum
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 About Roger Nusbaum (http://randomroger.blogspot.com)
Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog, which has been profiled in several top business publications, including Barron's and Forbes. Nusbaum has also been a financial consultant with Morgan Stanley, an investment counselor with Fisher Investments and an institutional equities and options trader with Charles Schwab. He holds a bachelor's degree in economics from San Diego State University |
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