FTSE boldly goes to the final Frontier 50
The index vendor releases an index that tracks 50 frontier-market stocks, with a full-fledged frontier markets index to follow later this year.
FTSE has extended its global equity index series to cover frontier markets, alongside its existing developed and emerging market indices. It has just begun to calculate the FTSE Frontier 50, an index of 50 stocks from an eligible universe of 23 markets.
It decided to release this index ahead of the fleshed-out frontier range, as there are fund managers now developing exchange-traded funds on the back of it. In the fourth quarter of this year, FTSE plans to release country and regional indices covering the same markets.
MSCI and Standard & PoorÆs already offer frontier-market indices, but the FTSE offering has its differences, following the same methodology underlying its developed and emerging-market products, says Andrew Buckley, executive director in London. But criteria are less onerous.
FTSE has 21 criteria that a market must pass to be included in its developed-market indices, and 15 for emerging markets. For frontier markets, it is sticking to just the most basic five requirements, including an independent regulatory authority, free repatriation of capital, basic transparency in pricing and reporting, basic clearing and settlement facilities, and a minimum free-float capitalisation of $750 million.
A feature on frontier markets in the July edition of AsianInvestor magazine notes $18 billion now tracks 145 markets that can be considered frontier, with most of that money from institutions and family offices. Depending on how they are counted and measured, global frontier market cap ranges from $465 billion (says EPFR) or $1 trillion (says FTSE).
The 50 stocks included in the FTSE Frontier 50 come from Vietnam (Asia Pacific); Jordan, Oman and Qatar (Middle East); Kenya, Mauritius and Nigeria (Africa); and Bulgaria, Croatia, Cyprus, Estonia, Romania and Slovenia (Europe).
The fully developed frontier series will also include Bangladesh and Sri Lanka (Asia Pacific); Bahrain (Middle East); Botswana, Ivory Coast and Tunisia (Africa); and Lithuania, Macedonia, Serbia and Slovakia (Europe).
Some countries that S&P and MSCI consider to be frontier markets, such as Pakistan and United Arab Emirates, are regarded as emerging markets by FTSE.
It decided to release this index ahead of the fleshed-out frontier range, as there are fund managers now developing exchange-traded funds on the back of it. In the fourth quarter of this year, FTSE plans to release country and regional indices covering the same markets.
MSCI and Standard & PoorÆs already offer frontier-market indices, but the FTSE offering has its differences, following the same methodology underlying its developed and emerging-market products, says Andrew Buckley, executive director in London. But criteria are less onerous.
FTSE has 21 criteria that a market must pass to be included in its developed-market indices, and 15 for emerging markets. For frontier markets, it is sticking to just the most basic five requirements, including an independent regulatory authority, free repatriation of capital, basic transparency in pricing and reporting, basic clearing and settlement facilities, and a minimum free-float capitalisation of $750 million.
A feature on frontier markets in the July edition of AsianInvestor magazine notes $18 billion now tracks 145 markets that can be considered frontier, with most of that money from institutions and family offices. Depending on how they are counted and measured, global frontier market cap ranges from $465 billion (says EPFR) or $1 trillion (says FTSE).
The 50 stocks included in the FTSE Frontier 50 come from Vietnam (Asia Pacific); Jordan, Oman and Qatar (Middle East); Kenya, Mauritius and Nigeria (Africa); and Bulgaria, Croatia, Cyprus, Estonia, Romania and Slovenia (Europe).
The fully developed frontier series will also include Bangladesh and Sri Lanka (Asia Pacific); Bahrain (Middle East); Botswana, Ivory Coast and Tunisia (Africa); and Lithuania, Macedonia, Serbia and Slovakia (Europe).
Some countries that S&P and MSCI consider to be frontier markets, such as Pakistan and United Arab Emirates, are regarded as emerging markets by FTSE.
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