MSCI is launching an index of the 100 biggest and most liquid constituents of its frontier markets index that is designed to offer investors a more tradable product. BlackRock will launch an exchange-traded fund based on the index through the firm's iShares subsidiary.
“We have seen significant demand from clients around the world for a more tradable version of our MSCI Frontier Markets Index – especially from those who face various obstacles in replicating broader frontier markets indices,” said Baer Pettit, managing director and head of the MSCI Index Business.
Investors in frontier markets are attracted by fast growth in countries such as Kazakhstan, which was the best-performing frontier market in the first quarter with a return of more than 35% on MSCI's Kazakhstan index. Romania and Vietnam also performed well in the first three months of the year.
Overall, MSCI's frontier markets index performed poorly with less than 4% growth in the first quarter, well below MSCI's developed and emerging markets indices. Political uncertainty in the Middle East and low growth in Qatar, Kuwait, Bahrain and Oman were partly to blame.
©2012 funds europe