Frontier markets could see annual growth of 11% over the next 10 years, Swiss & Global Asset Management has predicted, fuelled by relatively low stock market penetration compared to overall GDP, strong demographic profiles and economic prospects.

Swiss & Global’s Frontier Markets Investment Guide considered Nigeria, Tunisia, Kazakhstan and Mongolia to be attractive frontier market investment opportunities.

The study found that frontier markets have seen fund flows of US$2.9 billion since the start of 2010, yet concerns remain over the local conditions from an economic, political or social perspective.

Andrzej Blachut, head of emerging market equities, Swiss & Global, said: “Frontier markets offer investors the chance to enter a market at the beginning of its growth story and the potential for superior investment returns. The gap between emerging and developed markets is narrowing and frontier markets appeal to investors who are looking for the next undiscovered gem. These markets tend to have lower correlation to global stock markets and have been relatively insulated from problems in the global economy.”

Swiss & Global added that frontier markets should form a 5-10% allocation of investor portfolios.

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