Frontier ETFs - Too Risky?

[JLJ 10]

What do you guys think of the 'Frontier' ETFs? I'm looking at Claymore/BNY Mellon Frontier Markets (FRN). It doesn't have the wide price swings of other Frontier ETFs like EEM or VWO. FRN also has less volume - what happens if I want to sell and nobody is buying? How little volume is too little? As for the whole frontier thing, obviously you wouldn't buy an ETF that was only one country or sector, that would be way too risky. Might one of these be a good buy for a small position with a close stop? Or is there an increased risk of a scary fast drop that would blow past your stop loss order?

I know this is at least two questions in one, I appreciate any input.

[MadMarketScientist 11]

When I look at it I don't seen any extraordinary volatility that you sometimes see in the leveraged ETFs. It looks very much like an index tracking ETF -- of course the markets it invests in are definitely more of the "new" frontier.

 

"The top four country holdings in FRN, as of March 31st, are Chile, Colombia, Egypt, and Poland, which account for just under two-thirds of the fund’s holdings. As it happens, both Chile and Colombia are among the top-performing stock markets in the world this year."

 

A quote I found online. Chile as you may know has been on fire for a while. The other 3 in their way are doing well especially compared to the global market. It has definitely well outpaced the larger country indices especially in the last few months - as volume seems to have picked up a lot.

 

I would bet it has a place in a well diversified allocation -- not sure I'd be betting the ranch but if someone came in at 10% - 20% into these markets it probably should be considered.

[JLJ 10]

Thanks for the feedback!