Tags: Frontier | market | government | bond

You Can Now Invest in Frontier-Market Government Bond Mutual Fund

By    |   Friday, 02 May 2014 10:34 AM

Investors have been jumping into frontier-market stocks through mutual funds for some time, and now they can dip into frontier-market government bonds the same way.

The first U.S. mutual fund that invests mainly in frontier-market government bonds — American Beacon Global Evolution Frontier Markets Income Fund — started up in late February, The Wall Street Journal reports.

Frontier markets are less developed than emerging markets are. The American Beacon fund invests in countries such as Venezuela and Rwanda, according to The Journal.

Editor's Note:
Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

Individual investors are apparently more enamored with frontier markets than their emerging brethren so far this year.

They have allocated $614 million to frontier-market stocks and bonds during that period, a record rate, according to EPFR Global. At the same time, emerging markets have seen an outflow of $35 billion.

Frontier markets offer juicy yields. Pakistan issued a 10-year note last month with an 8.25 percent yield. By comparison, the 10-year U.S. Treasury yield stood at 2.66 percent early Friday

But many experts urge caution on investing in frontier markets, given their volatility.

"If you get something really negative and everyone's heading for the exit, it gets really crowded by the door," John DeClue, a senior strategist at U.S. Bank's wealth-management division, tells The Journal.

To be sure, others are more enthusiastic. "People are very excited about Africa," Gavin Graham, chief strategy officer at Integris Pension Management, tells The Toronto Globe and Mail.

"It's the new China. You've got demonstrable improvement in political and corporate governance, and you're starting to see some fairly major growth in GDP. The possibilities there are very attractive."

Editor's Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

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Investors have been jumping into frontier-market stocks through mutual funds for some time, and now they can dip into frontier-market government bonds the same way.
Frontier, market, government, bond
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2014-34-02
Friday, 02 May 2014 10:34 AM
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