Frontier Markets: Where Picking Stocks Is Paying Off

In frontier markets, research and legwork give managers an edge
Traders work on the floor of the New York Stock Exchange Photograph by Spencer Platt/Getty Images

Fund managers who focus on the world’s least-developed markets are trouncing their benchmark index—something most investors routinely fail to do. Mark Mobius’s Templeton Frontier Markets Fund and 12 similar funds investing in countries from Vietnam to Nigeria and Romania earned an average 24 percent last year, topping the 8.4 percent gain in the MSCI Frontier Markets Index. Their edge comes from uncovering undervalued stocks in markets where there aren’t crowds of well-informed investors. “The companies are overlooked and under-owned,” says Carlos von Hardenberg, an Istanbul-based money manager at Franklin Templeton Investments who helped the firm’s $1.3 billion Frontier Markets Fund post a 24 percent gain last year.

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