Frontier Market ETFs: Guide to the MSCI Frontier 100 Index Fund (FM)


This guide is part of a series for investors looking to access frontier markets through ETFs (check out other guides we have done here). While we have focused on the MSCI Frontier Index as a whole before, we have not touched on the actual ETF related to their index.

Key Facts: (all data as of 12 Feb 2015)

  • Ticker: FM
  • Exchange: NYSE
  • Issuer: iShares
  • Trading since: September 2012
  • Benchmark Index: MSCI Frontier Markets 100 Index
  • Expenses: Management fees of 0.79%
  • Website

Geographical Breakdown:


  • 17 frontier market countries are represented in the index
  • The top 3 countries of Kuwait, Argentina, and Pakistan worth over 50% of the total weighting
  • There are 5 FM countries with just one holding on the index: Mauritius, Jordan, Slovenia, Estonia, Bahrain

Sector Breakdown:


  • Financials make up over 50% of the index; this is unfortunate for diversification purposes, but not uncommon since many of the most mature listings in frontier markets start with banks and other financial institutions
  • Two sectors that frontier market investors normally look for to play the growing middle class story are Telecommunications and Consumer Staples. These two sectors represent the 2nd and 4th largest sectors and 22.4% of the total weighting

Currency Breakdown


  • Since some of the holdings are depository receipts and listed on developed market exchanges, the index contains 15 different currencies, with Argentina and Kazakhstan’s holdings both represented by USD
  • FM is not currency hedged, so in addition to the movement of the USD affecting foreign earnings of holdings, currency moves can have a large impact on the performance of this index
  • Currency risk is a major concern with high volatility currencies like PKR, NGN, KES, and VND underlying major chunks of the index

Top Holdings:

The top 3 holdings in the MSCI Frontier 100 Index take up over 17.5% of the entire index by themselves. No other holdings have a weighting over 3%.

National Bank of Kuwait (Weighting: 7.04%)

NBK was founded in 1952 and the first indigenous bank in the Gulf region. With over $70 billion USD in total assets, almost $12 billion USD in assets under management, and over $2.2 billion USD in revenues in 2014, it is a regional powerhouse. NBK has a market cap of over $14.5 billion USD.  Befitting such a large bank, it’s share price has been relatively stable but has trended lower over the past year.

Kuwait Finance House (Weighting: 5.59%)

KFH was the first Islamic Bank established in Kuwait and remains one of the best Islamic banks in the world today as per many industry awards. From its 2013 annual report, KFH had $54 billion in total assets, $10 billion in deposits, and over $3.3 billion USD in revenues. KFH has a market cap of almost $11.5 billion USD, with almost a quarter of the company owned by the Kuwait Investment Authority.

Mobile Telecommunications (Kuwait) (Weighting: 4.91%)

Mobile Telecommunications Company in Kuwait, is now known as Zain group after a rebranding in 2007. They operate in 8 countries, mostly in the Middle East, but are also the #1 operator in both Sudan and South Sudan – they are #1 in market share in 6 out of 8 of their markets. Zain used to have operations in 13 countries in Africa, but these were sold in 2010. In 2014, they had revenues of over $4.1 billion USD, but this was actually less than the year before. This was due to their managed active customers falling 4% in 2014 to 44.3 million total. Like KFH, the Kuwait Investment Authority owns just under a quarter of Zain group.


photo credit: As The Sun Sets on the City On A Beautiful Evening…

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