| Fund | Highest country allocation | Weighting (%) | Second highest country allocation | Weighting (%) |
| Aberdeen Frontier Markets Investment Trust | Vietnam | 16.1 | Kenya | 10 |
| Barings Frontier Markets | Argentina | 18.1 | Vietnam | 13 |
| BlackRock Frontiers Investment Trust | Argentina | 10.8 | Egypt | 8.1 |
| Jupiter Emerging & Frontier Income Trust | United Arab Emirates | 5.7 | Nigeria | 5.2 |
| Magna New Frontiers | Vietnam | 20.3 | United Arab Emirates | 19.7 |
| T Rowe Price Frontier Markets Equity | Argentina | 19.9 | Vietnam | 18.3 |
| Templeton Frontier Markets | Vietnam | 14.7 | Philippines | 9.3 |
But another popular preference listed in Table 1 (above) has struggled as of late.
Argentina has performed well in recent years. It was downgraded to frontier market status in 2009 after its then populist president imposed capital controls, but a reversal of this situation has seen it get the go-ahead to rejoin the MSCI Emerging Markets index next year.
Investors have enjoyed a rich run of form in the last five years, with the MSCI Argentina index gaining 168.1 per cent.
Figure 1
Source: FE Analytics
However, a decline has occurred more recently, as detailed in Figure 1, so caution may be justified.
“This [stockmarket rally] was very much derailed in recent months with the value of the Argentinian peso dropping significantly and inflation spiralling, leading to Argentina going to the IMF for help,” Mr Roberts explains.
On the up
Some managers have decided to focus elsewhere.
Mr Bokor-Ingram, who co-manages the Magna New Frontiers fund, has exited or reduced positions in markets such as Argentina and Pakistan to focus on the Middle East, where he believes geopolitical risks are “overstated”.
This has involved putting money into Saudi Arabia but also the United Arab Emirates, which recently announced new expatriate visa and foreign ownership rules.
“Both of these changes continue to open up the economy and drive investment. In addition, a new $13bn investment programme has just been announced,” he says.
As ever, choosing the right exposure is important, even if investors are backing an economy on the up.
Oliver Bell, portfolio manager for T Rowe Price, notes that he has attempted to identify companies “on the right side of change” within Saudi Arabia, opting to mainly invest in banking, consumer and healthcare names.
Banks, for example, are beginning to feel the effects of broader improvements in the economy, and an increased level of loans being taken out.
david.baxter@ft.com
