Emerging market investing has taken off in recent years, as investors have sought out sources of high growth that developed economies simply cannot offer. But while investing in these developing economies has become relatively commonplace, frontier market investing is still in its formative stages.

Frontier markets are economies that are developing, but are still too young to be considered a traditional emerging market. The lines between a frontier and emerging market are somewhat subjective (with major institutions differing on which countries they define as frontier), but MSCI currently classifies 33 nations as “frontier markets.” These countries typically have a great deal of political instability but carry the potential for big growth.

From an investment standpoint, these markets have become more popular among investors searching for long-term growth. The nations are currently illiquid with low market capitalizations, but the risk/reward trade off is quite high, as the nations have the potential for high growth in the coming years [see also Emerging Market ETFs: Alternative Weighting Edition].

When it comes to actually investing in these economies, the choices are still limited, as gaining access to companies in these hard-to-reach markets has proven to be something of a headache. Enter ETFs, as these products are slowly but surely dissecting the frontier world, just as they did for traditional emerging markets.

Investing in Frontier Markets with ETFs

There are a handful of ETFs currently on the market that focus on these nations, with some featuring broad-based exposure and others honing in on a particular region. Here are the three broad frontier market options:

▪ iShares MSCI Frontier 100 Index Fund (FM): The most popular option currently on the market, FM has racked up approximately $650 million in assets and some steady volume to go along with it. Debuting in 2012, this ETF spreads its assets all across the frontier world with a tilt towards financial services companies. The fund’s net expense ratio is 0.79 percent.

▪ Next Emerging & Frontier ETF (EMFM): Global X rolled out this fund in late 2013 and has ramped up to roughly $160 million in assets. Rather than exclusively feature frontier markets, EMFM holds a mix of nations, including smaller emerging markets to give investors a healthy mix. The expense ratio is 0.58 percent.

▪ Frontier Markets ETF (FRN): Despite having debuted in mid-2008, FRN was quickly surpassed by FM and EMFM, as it has just under $100 million in total assets. The fund is heavily skewed towards Latin America, with Chile and Argentina accounting for nearly 55% of the fund’s holdings. Its expense ratio is 0.70 percent.

Beyond the broad options, there are several funds that keep their focus on a particular country or region:

▪ Market Vectors Vietnam ETF (VNM): Launched in 2009 and with an expense ratio of 0.72 percent, this is the first and only fund to wholly allocate its assets to Vietnam. VNM has hit home for many investors as it has been able to gather an impressive $544 million in assets. That said, it’s average annual return since inception is minus 3 percent.

▪ Market Vectors Gulf States Index ETF (MES): This fund keeps its gaze set on the Middle East, investing in a basket of nations (including UAE, Qatar, and Kuwait), the majority of which fall under the frontier moniker. The fund’s expense ratio is on the high side at 0.98 percent.

▪ Global X Nigeria Index ETF (NGE): Like VNM, NGE is the first and only fund dedicated to the frontier market of Nigeria. The fund, which has an expense ratio of 0.68 percent and assets of only about $19 million, hit the market in early 2013.