Bob's Daily Buzzword: `Frontier Markets'

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Sept. 26 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners LLC, explains "Frontier Markets." (Source: Bloomberg)

We are focused on frontier markets.

I know mark mobius, everyone knows his name.

Templeton had to close one of its frontier market funds because of too much money flowing in, which is not some thing you hear everyday.

What do you make of that?

Like it is interesting, if you look at how much money has been flowing in, do something on the order of $3 billion and total.

You might say, that does not really sound like all that much, but you have to remember that these frontier markets really are very small.

If you look at an exchange like dubai, the only turnover about $150 million worth of stocks per day.

Let's name some of them -- you just named dubai.

Argentina is another.

We have a world map actually.

Look at this.

You colored it in with your own pencil, i am sure.

You can see that there are several places in africa.

Vietnam is a big one right now.

Everyone loves vietnam.

A lot of places in africa are filled in.

This is the hottest area for investing right now.

An awful lot of interest in africa.

People are accessing it through these funds and through etf's. it is a less-developed market, a less liquid one.

Therefore, in theory, if you hit a homerun, it is exponential returns.

It is emerging emerging markets.

These are the subsets that have the greatest potential for growth.

We have another chart that will show you how well they have done.

This is a first.

It has really never happened before.

You have the frontier markets dramatically outperforming the regular emerging markets.

The frontier markets are up something like 13% this year, whereas emerging markets are down somewhere around 4%. you can see investors are really trying to get that growth by going into the frontier markets.

Aside from the point that there is often times the political instability, infrastructure -- you can name all the different brands of instability.

What else are investors thinking about?

An important detail in terms of total recurrent -- total return is it is very expensive to trade in these markets.

We are used to sub penny pricing, but that is not true in a lot of these places.

They have big bird bridge -- big brokerage fees.

Private equity and infrastructure, best ways of going.

Awesome for institutions, yes.

Thank you very much, as always.

This text has been automatically generated. It may not be 100% accurate.


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