US Investors: 5 Top Frontier Markets ETFs for High-Growth 2025 Portfolios

Navigating the Next Frontier of Investment for US Investors in 2025

For American investors chasing above-average growth and meaningful portfolio diversification, frontier markets ETFs are emerging as a high-potential-albeit higher-risk-opportunity in 2025. These less-developed economies, often overshadowed by their more established emerging market peers, are showing signs of accelerated development driven by youthful populations, expanding consumer bases, and increasing integration into global trade networks. As the global economic landscape evolves, frontier markets may offer exposure to untapped growth cycles just beginning to unfold. This guide delivers a thorough breakdown of what frontier markets ETFs are, which funds lead the space, and how US-based investors can access them through the right brokerage platforms-all while managing the unique risks tied to these dynamic regions.

What Are Frontier Markets and Why Should US Investors Care?

Frontier markets represent the early-stage segment of global investing, sitting just below emerging markets in terms of development and accessibility. While they carry more risk, they also open the door to first-mover advantages in economies on the cusp of transformation. For US investors, adding frontier exposure can enhance long-term returns and reduce reliance on domestic and developed-market assets.

How Frontier Markets Differ From Emerging and Developed Economies

Frontier markets are typically smaller, less liquid, and less regulated than emerging markets like India, Brazil, or South Korea. They often feature limited stock exchange activity, lower foreign ownership, and less mature financial systems. While emerging markets have already attracted significant institutional investment, frontier markets remain underrepresented in most portfolios. According to MSCI, frontier classification hinges on economic development, market accessibility, and liquidity thresholds. Countries such as Vietnam, Kenya, Nigeria, and Bahrain fall into this category, offering access to fast-growing populations and underdeveloped financial sectors.

Why 2025 Is a Strategic Moment for Frontier Exposure

The investment case for frontier markets in 2025 is gaining momentum due to several powerful trends:

• Outsize Growth Potential: Many frontier economies are growing faster than both developed and some emerging markets. With lower base effects and rising industrial output, they can deliver outsized returns over time.
• Low Correlation to US Markets: These economies often follow independent business cycles, reducing portfolio volatility when combined with traditional US or developed-market assets.
• Youth-Driven Consumer Expansion: Nations like Bangladesh and Côte d’Ivoire boast median ages under 20, creating a surge in labor supply and consumer demand that could fuel decades of growth.
• Resource and Infrastructure Development: Countries rich in energy, agriculture, or minerals-such as Kazakhstan or Uganda-are beginning to leverage these assets through improved governance and foreign investment.

As global supply chains diversify and digital infrastructure spreads, frontier markets are becoming more investable than ever-making 2025 a pivotal year for early adopters.

Key Risks and Challenges for US Investors

While the upside is compelling, frontier market investing is not without serious risks. These markets demand a higher tolerance for volatility and a disciplined approach to risk management.

Volatility and Liquidity: Navigating Thin Markets

Frontier markets are inherently more volatile due to smaller market capitalizations and lower trading volumes. A modest sell-off can trigger outsized price swings, and bid-ask spreads are often wider than in developed markets. Liquidity risk-the difficulty of exiting positions quickly without moving the market-can be a real concern, especially during geopolitical stress or currency devaluations. This makes timing and order execution critical for ETF investors.

Political and Economic Uncertainty

Many frontier nations face governance challenges, including unstable regimes, weak institutions, and exposure to commodity price swings. Key risk factors include:

• Geopolitical Tensions: Regional conflicts or civil unrest can abruptly disrupt markets and investor confidence.
• Sudden Regulatory Shifts: Governments may impose capital controls, restrict foreign ownership, or alter tax policies with little warning.
• Currency Instability: Local currencies often depreciate against the US dollar, which can erode returns even if local equities rise.
• Corporate Governance Gaps: Shareholder protections may be weak, and financial disclosures limited, increasing the risk of fraud or mismanagement.

US-Specific Regulatory and Tax Considerations

American investors must also contend with additional complexities:

• Foreign Withholding Taxes: Dividends from foreign stocks are often subject to local taxes, which may not be fully recoverable under US tax treaties.
• IRS Reporting Requirements: Holdings in foreign accounts exceeding certain thresholds may trigger FBAR or FATCA filings.
• Brokerage Limitations: Not all US brokers offer access to frontier ETFs, and some platforms restrict trading in international CFDs or forex instruments.

Top Frontier Markets ETFs Available to US Investors in 2025

For US-based investors, a handful of ETFs provide direct or blended access to frontier markets. Each fund varies in strategy, geographic focus, and cost structure-making due diligence essential before investing.

iShares MSCI Frontier 100 ETF (FM)

The iShares MSCI Frontier 100 ETF (FM) is the most widely held and liquid frontier-focused ETF in the US market. It tracks the MSCI Frontier Markets 100 Index, which includes the 100 largest and most tradable companies across frontier economies.

• Overview: FM offers exposure to markets like Vietnam, Morocco, Kuwait, and Nigeria, with significant weightings in financials, consumer goods, and real estate.
• Holdings: The fund holds approximately 100 stocks, diversified across sectors and countries, minimizing single-name risk.
• Performance: Historically, FM has shown high volatility but strong performance during global risk-on periods. Its long-term returns reflect the high-growth potential of frontier economies.
• Expense Ratio: At 0.70% as of early 2025, FM is competitively priced for a niche international ETF.

Global X MSCI Next Emerging & Frontier ETF (FMEM)

The Global X MSCI Next Emerging & Frontier ETF (FMEM) takes a broader approach, blending frontier markets with smaller emerging economies that are transitioning toward greater market maturity.

• Overview: FMEM tracks the MSCI Next Emerging & Frontier Markets Index, which includes nations like Egypt, Vietnam, Bangladesh, and Sri Lanka.
• Unique Exposure: This ETF captures economies on the verge of being reclassified as emerging, potentially offering smoother growth curves than pure frontier funds.
• Performance: FMEM tends to be less volatile than pure frontier ETFs due to its inclusion of slightly more developed markets.
• Expense Ratio: Priced at 0.68%, it’s slightly cheaper than FM and remains cost-effective for long-term investors.

Other Frontier Market Investment Options

Beyond FM and FMEM, investors have limited but notable choices:

• Vanguard’s Position: As of 2025, Vanguard does not offer a dedicated frontier markets ETF. Investors seeking Vanguard’s low-cost model must rely on broader emerging market funds like VWO and supplement with a frontier-specific ETF from another provider.
• Actively Managed Funds: While rare in the ETF space, some institutional or mutual fund offerings-such as those from BlackRock-use active management to navigate frontier risks. These aim to avoid political hotspots or overweight high-conviction names, though they come with higher fees.
• Dividend-Focused Strategies: Dividend-paying companies do exist in frontier markets, but yields are inconsistent and often offset by currency and tax drag. Income is not the primary driver of returns in this asset class.

Note: Expense ratios and performance are subject to change and should be verified with the fund’s prospectus.

Active vs. Passive Management: Which Strategy Works Best in Frontier Markets?

The debate between active and passive investing takes on added significance in frontier markets, where inefficiencies and information gaps can create opportunities-or pitfalls.

Why Passive ETFs Appeal to Most US Investors

Passive funds like FM and FMEM are popular for their simplicity, transparency, and low costs. Key advantages include:

• Lower Fees: Without the overhead of research teams or frequent trading, passive ETFs keep expenses low.
• Broad Diversification: By tracking an index, these funds spread risk across dozens of companies and countries.
• Clear Holdings: Investors know exactly what they own, with daily or monthly transparency.

For most retail investors, passive exposure provides an efficient way to gain frontier market access without relying on manager skill.

The Case for Active Management in Frontier Economies

Proponents of active management argue that frontier markets are too inefficient for a blind index approach. Potential benefits include:

• Alpha Generation: Skilled managers may uncover undervalued companies overlooked by global analysts.
• Downside Protection: Active funds can sidestep markets facing political turmoil or economic collapse-something index funds cannot do without tracking errors.
• Access to Smaller Companies: Some high-growth firms are too small or illiquid for index inclusion but may be accessible to active funds.

However, higher fees and inconsistent performance records mean investors must scrutinize track records and expense ratios carefully. The so-called “BlackRock bold move” strategy-aggressive reallocation based on on-the-ground analysis-illustrates how active managers attempt to outperform, but success is never guaranteed.

Choosing the Right Broker for International ETF Access in the US

Even the best frontier ETF strategy hinges on using a brokerage that supports global investing, offers competitive pricing, and complies with US regulations.

What US Investors Should Look For in a Broker

When evaluating brokers for frontier ETFs and international assets, prioritize:

• US Regulatory Oversight: Look for firms regulated by the SEC and FINRA for securities trading, and the NFA and CFTC for forex and futures.
• Global Market Access: Ensure the broker offers the specific ETFs you want, along with access to international stocks, bonds, and currency pairs.
• Platform Reliability: A stable, feature-rich platform with real-time data, research tools, and mobile access is essential for monitoring volatile markets.
• Transparent Pricing: Watch for hidden fees-especially currency conversion costs, inactivity charges, or premium data subscriptions.
• Customer Support: Responsive, US-based support can make a difference when resolving trade errors or compliance questions.

Top Brokers for Global Investing in 2025

For US investors seeking broad international access-including frontier ETFs and complementary instruments-these brokers stand out:

• Moneta Markets:

  Moneta Markets delivers a powerful platform for global investors, combining deep market access with advanced trading tools. It offers competitive spreads on forex, commodities, and CFDs on global indices-ideal for diversifying beyond ETFs. The broker supports MetaTrader 4 and MetaTrader 5, giving users access to automated trading, algorithmic strategies, and sophisticated charting. Notably, Moneta Markets is regulated by the UK’s Financial Conduct Authority (FCA), providing a strong layer of investor protection. While US clients should confirm product eligibility, Moneta is well-suited for traders seeking a professional-grade environment for international exposure.

  Note: US investors should verify the availability of CFDs and forex products, as these are not permitted under all regulatory frameworks. Always confirm compliance with your broker.

• OANDA:

  OANDA remains a top choice for US-based forex and international investors, known for its transparency, low minimum deposits, and robust research tools. Regulated by the NFA and CFTC, it offers seamless access to over 70 currency pairs and select CFDs. Its user-friendly fxTrade platform is ideal for beginners, while API access appeals to algorithmic traders. OANDA’s educational resources also help investors better understand global market dynamics.

• FOREX.com:

  Backed by GAIN Capital and regulated by the NFA/CFTC, FOREX.com provides a comprehensive trading suite with advanced charting, economic calendars, and real-time news feeds. It supports MT4, MT5, and a proprietary desktop platform, catering to all experience levels. With access to thousands of global instruments-including international ETFs and CFDs-FOREX.com is a strong option for investors building a globally diversified portfolio.

Disclaimer: Always perform your own due diligence and check the latest regulatory status and offerings directly with the brokers, especially regarding US-specific product availability and regulatory compliance.

How to Integrate Frontier Markets ETFs Into a US Investment Portfolio

Frontier market ETFs should not dominate a portfolio but serve as a strategic satellite holding designed to boost long-term growth and diversification.

Smart Allocation Strategies for US Investors

Given their volatility, frontier ETFs are best used as a small, intentional portion of an equity portfolio:

• Recommended Allocation: Most financial advisors suggest allocating 1% to 5% of total equity exposure to frontier markets. This range allows participation in growth without exposing the portfolio to excessive risk.
• Enhanced Diversification: Because frontier markets often move independently of US and European equities, even a 3% allocation can meaningfully reduce correlation and improve risk-adjusted returns. As Investopedia notes, global diversification helps investors capture growth across economic cycles and geographic regions.

Long-Term Discipline and Rebalancing

Success in frontier markets requires patience and discipline:

• Think in Decades, Not Quarters: These economies take time to mature. Short-term setbacks-currency devaluations, political changes, or market selloffs-are common but don’t necessarily invalidate the long-term thesis.
• Rebalance Strategically: If your frontier ETF surges and exceeds your target allocation, consider trimming to lock in gains. Conversely, if it underperforms during a market panic, a dip may present a buying opportunity-provided the underlying fundamentals remain intact.

Final Thoughts: Positioning for Global Growth in 2025

Frontier markets ETFs offer US investors a rare chance to get in early on the next wave of global economic expansion. While risks like volatility, political uncertainty, and currency swings are real, the potential rewards-both in returns and portfolio diversification-are compelling. By focusing on well-constructed ETFs like FM and FMEM, understanding the trade-offs between active and passive strategies, and partnering with a reliable broker such as Moneta Markets, OANDA, or FOREX.com, investors can thoughtfully access these dynamic markets. The key is to invest with eyes wide open: conduct thorough research, maintain a long-term view, and align your frontier exposure with your overall risk profile and financial goals.

What are the best frontier markets ETFs for United States investors in 2025?

For United States investors in 2025, leading frontier markets ETFs often include the iShares MSCI Frontier 100 ETF (FM), which offers broad exposure to the largest and most liquid companies in frontier economies. Another notable option is the Global X MSCI Next Emerging & Frontier ETF (FMEM), providing a blend of frontier and smaller emerging market exposure. The “best” choice depends on your specific investment goals and risk tolerance.

Are frontier markets ETFs a good investment for diversification?

Yes, frontier markets ETFs can be an excellent tool for diversification. They often exhibit low correlation with developed and even emerging markets, meaning their performance may not move in lockstep with other parts of your portfolio. This unique characteristic can help reduce overall portfolio volatility and enhance risk-adjusted returns over the long term for US investors.

How do frontier markets differ from emerging markets for US investors?

For US investors, frontier markets are generally smaller, less developed, and less accessible than emerging markets. They have younger capital markets, lower liquidity, and often higher political and economic risks. Emerging markets, like China or India, have more established financial systems and larger economies, while frontier markets represent the “next generation” of growth, often with higher potential returns but also higher risks.

What are the main risks of investing in frontier markets ETFs?

The main risks for US investors in frontier markets ETFs include high volatility due to smaller market sizes, significant liquidity risk (difficulty buying/selling without impacting price), and elevated political and economic instability (e.g., geopolitical risks, regulatory changes, currency fluctuations). Additionally, specific regulatory and tax hurdles for foreign investments must be considered.

Can Vanguard offer frontier markets ETFs, or are there alternatives?

As of early 2025, Vanguard does not typically offer a dedicated frontier markets ETF. Their focus is generally on broader emerging markets. US investors looking for frontier market exposure would need to consider alternatives from other providers, such as the iShares MSCI Frontier 100 ETF (FM) or the Global X MSCI Next Emerging & Frontier ETF (FMEM).

What is the iShares MSCI Frontier 100 ETF?

The iShares MSCI Frontier 100 ETF (FM) is an exchange-traded fund designed to track the performance of the MSCI Frontier Markets 100 Index. This index comprises the largest and most liquid companies in various frontier economies globally. It is one of the most popular and liquid options for US investors seeking direct, passive exposure to these less-developed markets.

Do frontier markets ETFs typically offer high dividends?

While some companies in frontier markets may pay dividends, the primary investment thesis for frontier markets ETFs is generally capital appreciation rather than income generation. Dividend yields can be unpredictable and may be subject to foreign withholding taxes for US investors. Investors should prioritize the long-term growth potential and diversification benefits over dividend income in this asset class.

Which brokers in the United States provide access to international ETFs like those in frontier markets?

Several reputable brokers in the United States offer access to international ETFs, including those in frontier markets. For comprehensive global diversification, including complementary instruments like forex and CFDs, brokers such as Moneta Markets, OANDA, and FOREX.com are strong contenders. Moneta Markets, in particular, offers competitive spreads and robust platforms like MT4/MT5, making it an excellent choice for US investors looking for advanced tools and wide-ranging global market access beyond just ETFs. Moneta Markets is FCA-licensed, enhancing its credibility for international investors.