Marek Ondraschek: Why Frontier Markets actually reduce, not add risk

Frontier Markets have lower market capitalization and liquidity than the more developed, "traditional" emerging markets. The frontier equity markets are typically pursued by investors seeking high, long term returns and low correlations with other markets.

The implication of a country being labeled as Frontier is that, over time, the market will become more liquid and exhibit similar risk and return characteristics as the larger, more liquid developed emerging markets.

Frontier Assets diversify and reduce, not add risk

As a matter of fact, diversification is the most important tool to control risk. However, global equity markets and traditional emerging markets are highly correlated. Marek Ondraschek, Founder of Zurich-based ALNUA Investment Managers and former CEO & CIO of Swiss Life Asset Management says investors can achieve substantial diversification potential by including real assets and Frontier Assets in their portfolios.

More than that -- investors can actually reduce risk by adding Frontier Assets, which contradicts the general notion that risk would be added by including those markets. In this new Opalesque BACKSTAGE video, you will learn more about:

* Why invest in Frontier Markets?
* Definition of Frontier Markets
* How (and how not) to invest in Frontier Markets
* Why adding Frontier Markets actually reduces risk, instead of adding risk
* The Risks of Frontier Markets and how to deal with them
* Outlook

Before setting up ALNUA Investment Managers, Marek Ondraschek was CEO & CIO of Swiss Life Asset Management and had senior management positions in research & fund management with UBS.

ALNUA is an independent Investment Manager based in Zurich, Switzerland. The company manages investments in Real Assets & Frontier Asset, supporting clients regarding the optimal integration of those asset into existing portfolios. ALNUA's investment solutions are long-only, without leverage, actively managed, risk controlled and liquid.
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Frontier Markets have lower market capitalization and liquidity than the more developed, "traditional" emerging markets. The frontier equity markets are typically pursued by investors seeking high, long term returns and low correlations with other markets.

The implication of a country being labeled as Frontier is that, over time, the market will become more liquid and exhibit similar risk and return characteristics as the larger, more liquid developed emerging markets.

Frontier Assets diversify and reduce, not add risk ...more