Until recently, most financial advisers would tell clients that they should not put more than 5 per cent of their money into the sector, using exchange traded funds. But that advice is starting to look outdated, as emerging markets, which are made up of the world's developing nations, already make up 11 per cent of the world stock market index.
The history :
When the term emerging market was coined in 1986 by the International Finance Corporation, a subsidiary of the World Bank, there were only six such markets that were open to foreign investors. They were Mexico, Singapore, Malaysia, Hong Kong, Thailand the the Philippines. Today there are more than 50, ranging from Cambodia to Brazil.
The frontier economies :
Countries such as Botswana, Latvia and Panama are now part of the latest wave of economies to appear on the radar of emerging markets funds. Not as well known or well developed as mature emerging markets such as Singapore or Hong Kong, these frontier markets are the latest high-risk, high-reward opportunity and frontier markets ETF are now being created to invest in them.