Frontier markets could see an annual growth of 11% over the next 10 years, predicted asset managers Swiss & Global Asset Management, outperforming many developed and mature emerging markets.
Good economic prospects, strong demography and limited penetration by the stock market when compared to the overall GDP are some of the factors that can help these frontier markets grow, said the study.
Frontier markets are classified as economies with low per capita GDP and where investors face a large number of restrictions. SGAM reckons frontier markets like Nigeria, Tunisia, Kazakhstan and Mongolia will provide the best investment opportunities.
The Zurich-based asset manager said that frontier markets had seen fund flows of almost $3 billion since the beginning of 2010.
Andrzej Blachut, head of emerging market equities at SGAM 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."
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