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Braving the frontier - sub custody in testing markets
15 December 2011
Frontier markets are now in the sights of global asset managers – but does a network of sub-custodians exist to meet this demand, and if not what does that mean for investors? Annabelle Palmer reports
Read more:
Frontier markets
HSBC
Citi
Schroders
Insparo
BNP Paribas
emerging markets
MSCI
Since the term emerging market appeared around 25 years ago, investors have reaped the rewards of investing in risky, emerging economies. A $1,000 investment in the MSCI Emerging Markets index on the day it was launched in 1988 would be worth $17,553 today, an annual return of 12.7%.The same investment in the MSCI World index would be worth just $4,940 today, an annual return of 6.9%.While emerging markets are expected to continue doing well, many believe that the growth rates they have experienced are slowing down. As emerging markets have matured and become less risky, correlations with the developed world have increased and expected returns have come downward.Although correlations with developed market have increased in the frontier sector as well, they are lower than in emerging markets and so for those investors looking to replicate the success seen in emerging markets, frontier markets look promising.These markets have relatively small equity...
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