Investing in frontier markets can increase diversification

Despite the high risks (currency risk, liquidity risk, lack of transparency, high transaction costs, poor regulatory environment) associated with them, Frontier markets such as Vietnam are often viewed as the potential new emerging markets and constitute an attractive type of markets for several reasons. One of them is the expected high returns over the long run and another is the low correlation often found between these markets and the most developed markets. Hence investing in frontier markets can increase diversification.