Individual Investors Look to the 'Frontier' in Quest for Returns; One New Mutual Fund Invests in Bonds of Less-Developed Nations; Some Advisers Say Ride in These Markets Could Be Rough
Wanted: small investors willing to commit part of their savings to less-developed countries with fast-growing economies and the potential for big returns.</br></br>That, in essence, is the pitch of the first U.S. mutual fund that invests primarily in the government bonds of so-called frontier markets.</br></br>Launched in late February by American Beacon Advisors Inc., an investment firm in Fort Worth, Texas, with $55 billion under management, this fund takes investors to countries such as Venezuela and Rwanda that are one notch lower in economic development than emerging markets like India and China. The mutual fund is managed by Global Evolution, a hedge fund in Denmark.</br></br>The push into frontier markets is the latest effort by money managers to make high-risk, high-return bets more accessible to mom-and-pop investors. Individuals in the U.S. already have the option of investing in a handful of stock funds dedicated to frontier markets.</br></br>Some wealth advisers argue that small investors may be better served putting their retirement savings into more-transparent investments. Even American Beacon advises that its new fund is only appropriate for long-term investors and that the fund shouldn't make up the majority of a portfolio.