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Frontier Markets

Driven by multi-generational mega trends

Getting to know opportunities that Frontier Markets bring

Frontier Markets are undergoing structural positive changes and embarking on reform programmes, resulting in better economic prospects in the near- and medium-term future. Watch the video to learn more about HSBC's Frontier Markets strategy, and the benefit it brings to investors.
Despite including some of the world's most populous and fastest growing economies, Frontier Markets remain relatively under-researched, undervalued, and under-owned.
Ramzi Sidani, CFA, Senior Fund Manager

In focus

Why Frontier Markets?

  • Demographics
    Young, large and growing populations provide a ‘demographic dividend’
  • Supply chain diversification
    In light of the concentration risk lessons of the Covid pandemic and as labour costs rise in China, manufacturing hubs are moving to Frontier countries so supply chains can be closer to end-market
  • Liberalisation
    Social reforms in several Frontier geographies are helping to diversify and liberalise economies resulting in stronger and more stable economic growth
  • Digitisation
    Rising disposable incomes are increasing technology penetration which should drive productivity improvements

Why now?

Attractive valuations

Attractive valuations
Frontier Markets trade at attractive valuation levels with higher earnings growth and higher dividend yields than emerging market peers
Lower volatility

Lower volatility
Low intra-country correlations contribute to lower volatility than emerging and developed markets

Diversification

Diversification
Low correlation with other asset classes offers the potential for diversification benefits

Key Risks

SRI = 4/7
The SRI (Summary Risk Indicator) is an overall indicator of the product risk level. The scale varies from 1 (least risky) to 7 (most risky). Historical data may not be a reliable indication for the future. The rating is not guaranteed to remain unchanged and the categorisation may shift over time. The lowest rating does not mean a risk-free investment. Do not run any unnecessary risk. Read the Key Information Document. The fund has a high risk indicator. The value of investments can go up as well as down.

  • Counterparty Risk: The possibility that the counterparty to a transaction may be unwilling or unable to meet its obligations
  • Derivatives Risk: Derivatives can behave unexpectedly. The pricing and volatility of many derivatives may diverge from strictly reflecting the pricing or volatility of their underlying reference(s), instrument or asset
  • Emerging Markets Risk: Emerging markets are less established, and often more volatile, than developed markets and involve higher risks, particularly market, liquidity and currency risks
  • Exchange Rate Risk: Changes in currency exchange rates could reduce or increase investment gains or investment losses, in some cases significantly
  • Investment Leverage Risk: Investment Leverage occurs when the economic exposure is greater than the amount invested, such as when derivatives are used. A Fund that employs leverage may experience greater gains and/or losses due to the amplification effect from a movement in the price of the reference source
  • Liquidity Risk: Liquidity Risk is the risk that a Fund may encounter difficulties meeting its obligations in respect of financial liabilities that are settled by delivering cash or other financial assets, thereby compromising existing or remaining investors
  • Operational Risk: Operational risks may subject the Fund to errors affecting transactions, valuation, accounting, and financial reporting, among other things
  • Sustainability risk: means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment

Further information on the potential risks can be found in the Key Information Document (KIID) and/ or the Prospectus or Offering Memorandum.

Important Information

HSBC GIF Frontier Markets is a sub fund of HSBC Global Investment Funds, a Luxemburg domiciled SICAV. Before subscription, investors should refer to Key Information Document (KID) of the fund as well as its complete prospectus. For more detailed information on the risks associated with this fund, investors should refer to the complete prospectus of the fund. The shares of HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons.

Article 6 SFDR : concerns financial products which do not promote environmental and/or social characteristics, have no sustainable investment objective and do not meet the definition of Articles 8 and 9.

Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. The commentary and analysis presented in this document reflect the opinion of HSBC Asset Management on the markets, according to the information available to date. They do not constitute any kind of commitment from HSBC Asset Management. Consequently, HSBC Asset Management will not be held responsible for any investment or disinvestment decision taken on the basis of the commentary and/or analysis in this document.

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