Can You Handle the new Frontier Market?

There's new blood in the ETF universe, and its not commoditites or leveraged funds, its the blood of the new frontier of investing, known as the frontier markets. On Thursday June 12th Claymore launched its Frontier Markets ETF (Ticker: FRN) which will attempt to track the Bank of New York Mellon New Frontier DR Index (Ticker: BKNFR). Here is a brief snippet from Claymore on what the index is comprised of:

The Frontier Index tracks the performance of depositary receipts in American depositary receipts ("ADR") or global depositary receipts ("GDR") form that trade on the London Stock Exchange ("LSE"), New York Stock Exchange ("NYSE"), American Stock Exchange ("AMEX") and Nasdaq Stock Market ("NASDAQ") of companies from countries that are part of the Frontier Market, as defined by the Index Provider.

The Index Provider currently defines the Frontier Market countries as: Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar, United Arab Emirates, Egypt, Ghana, Kenya, Malawi, Mauritius, Morocco, Nigeria, Tunisia, Zimbabwe, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Kazakhstan, Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia, Ukraine, Bangladesh, Pakistan, Papua New Guinea, Sri Lanka, Vietnam, Peru, Chile, Colombia, Ecuador, Jamaica, Panama and Trinidad & Tobago.

As of May 23, 2008, the Index's constituent countries were represented (in approximate market capitalization) in the Index as follows: Poland 25.0%, Chile 21.0%, Egypt 17.1%, Kazakhstan 7.8%, Peru 5.3%, Czech Republic 5.2%, Nigeria 3.4%, Lebanon 3.2%, Pakistan 3.0%, Oman 2.4%, Columbia 2.3%, Croatia 1.8%, Bahrain 1.4%, Georgia 0.7% and United Arab Emirates 0.5%.

Currently FRN's total market cap is just shy of $4,000,000 and has an expense cap of 0.65%.
The top 10 Holdings are names you probably have never heard of, and are as follows:

BANK PEKAO SA 7.94 %
TELEKOMUNIKACJA POLSKA 6.52 %
ORASCOM TELECOM HOLDING S 6.11 %
KAZMUNAIGAS 5.23 %
MINAS BUENAVENTURA ADR REP 2 SER'B'PEN1 5.20 %
ORASCOM CONSTRUCTION INDU 5.03 %
POLSKI KONCERN NAFTOWY OR 5.03 %
KGHM POLSKA MIEDZ SA 5.03 %
EMPRESA NAC ELEC-CHIL ADR 4.88 %
ENERSIS-ADR 4.21 %

Just recently PowerShares announced that it will be launching its own frontier market ETF with the planned ticker of PMNA. The fund will be based on the NASDAQ OMX Middle East North Africa Index, which is comprised of the largest and most liquid securities in Egypt, Morocco, Oman, Lebanon, Jordan, Kuwait, Bahrain, Qatar and the UAE.

PowerShares to Launch Frontier Market ETF

Invesco PowerShares today announced its plans to launch a new frontier markets ETF, which will focus on the Middle East and Africa. The anticipated ticker symbol for the new fund is PMNA, and the fund will be called the PowerShares MENA Frontier Countries Portfolio. The fund will be based on the NASDAQ OMX Middle East North Africa Index, which is comprised of the largest and most liquid securities in Egypt, Morocco, Oman, Lebanon, Jordan, Kuwait, Bahrain, Qatar and the UAE.

This will be an exciting new ETF option, as many investors are looking for a way to cash in on the newly popular frontier markets. The most popular option to date is the T.Rowe Price Africa and Middle East mutual fund (TRAMX) which has been given an endorsement by Fast Money's Tim Seymour, and is up 9.1% for the year as of May 31st.