Frontier market equities extended their lead over emerging and developed market indices in July, according to a leading index provider.
The Russell Frontier Market index gained 5% in the period from July 1 to August 6, meaning the index has risen more than 15% so far this year. In contrast, the Russell Emerging Market index is up 11% this year and the Developed Europe index is up 3%.
The largest country component of the Russell Frontier Market index is Kuwait and the third-largest is Qatar, which has not been upgraded to an emerging market as it has by rival index providers MSCI and S&P Dow Jones Indices.
Russell noted that the gains came despite geopolitical disruptions such as the crisis in Ukraine and the Israel-Gaza conflict. More recently, the rise of the Islamic State in Iraq and Syria (ISIS) and atrocities in Kurdistan have hit the headlines and threatened further instability.
However, Russell analysts are so bullish on equities that they would view such turbulence as an opportunity to extend positions, and not cut them.
“We think any pull-back from current market positions will likely offer a buying opportunity, so we think recent world events needn’t shake your focus on your investing goals,” says Andrew Pease, Russell Investments global head of investment strategy.
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