Northern Trust Launches Frontier Markets Index Fund

The fund seeks to provide institutional investors with exposure to under-represented regions such as Eastern Europe, Africa and the Middle East, as well as a broadened opportunity set in Asia and the Americas, according to a press release. The NTGI fund is benchmarked to the S&P Frontier Extended 150 Index and takes a diversified approach to the sub-asset class of emerging markets.   

Frontier markets are developing countries, such as Nigeria, Kenya, Vietnam, Sri Lanka, Croatia, Romania, Qatar and Kuwait, which have high economic growth rates and small, relatively illiquid and undercapitalized equity markets. The index strategy is offered to institutional investors in a collective trust fund structure to provide enhanced transparency, trading efficiency and institutional pricing for investors, the announcement said.  

The NTGI index team screened a wide universe of Frontier Markets for operational and regulatory market complexities that could be potential barriers to entry and exit for investors, and also analyzed various frontier benchmarks for diversification and transaction cost to determine the most efficient way to get exposure to the asset class.  

“NTGI’s Frontier Markets strategy is designed to offer diversified exposure that takes into account the real world challenges of investing in these markets,” said Greg Behar, Senior Investment Strategist for Northern Trust’s Global Quantitative Management group, in the announcement.