All anyone wants to talk to me about these days is frontier markets.

I was lucky enough to organize a breakfast at the recently completed Inside ETFs conference with Nouriel Roubini and 10 of the biggest ETF strategists in the world. I invited the group to the table for an hour of freewheeling discussion, figuring the questions would center on the Fed, the ECB and China.  Maybe Japan.

Instead, we started with West Africa and spent 45 minutes discussing frontier markets.  Everyone wanted to know if we had crossed over the threshold whereby frontier markets had become a real investment opportunity.  Professor Roubini’s answer was a definitive “Yes, but…”

Yes, but the best investments were probably in private equity.

Yes, but you had to deal with liquidity issues.

Yes, but political risk was a very real issue.

Yes, but … yes.

ETF investors seem to agree. Investors plowed $330 million in new money into frontier market ETFs in 2013. Amazingly, flows accelerated in January: Despite major pullbacks in global equity markets – and mass redemptions in most equity ETFs -- investors sunk $72 million in net new money into frontier market ETFs for the month.

Is it smart money?  Let’s investigate.

Don’t Judge A Frontier Markets ETF By Its Name
The first thing to know about Frontier Market investing is that you can’t take things at face value.  Consider this chart, which compares the two most popular “frontier markets ETFs.”