Role of emerging markets vis-à-vis frontier markets in improving portfolio diversification benefits

Nisha Mary Thomas, Smita Kashiramka, Surendra Singh Yadav and Justin Paul

International Review of Economics & Finance, 2022, vol. 78, issue C, 95-121

Abstract: The study examines the value addition provided by frontier markets vis-à-vis emerging markets in improving the diversification benefits of an international portfolio. The analysis is performed for Asia-Pacific and Europe. It also surveys international investors to corroborate the empirical findings. The results indicate that though frontier markets offer higher diversification opportunities than emerging markets, the frontier market investments are recommended for investors with good risk appetite. Asia-Pacific emerging markets perform better than frontier markets in improving the portfolio's performance. European frontier markets' performance was adversely affected by Covid 19 pandemic. Overall, Asia-Pacific equity markets provide greater potential for diversification than their European counterparts.

Keywords: Asia-pacific; Emerging markets; Europe; Frontier markets; International diversification; Portfolio choice (search for similar items in EconPapers)
JEL-codes: C61 G11 G15 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:78:y:2022:i:c:p:95-121

DOI: 10.1016/j.iref.2021.11.012

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