An MSCI news release said the MSCI Frontier Emerging Markets Index is designed to serve as a benchmark covering all countries from the MSCI Frontier Markets Index and the lower size spectrum of the MSCI Emerging Markets Index, which tends to be less correlated with developed markets.
In addition to the countries from the MSCI Frontier Markets Index, the following countries from the MSCI Emerging Markets Index will be included: Argentina, Colombia, Egypt, Jordan, Morocco, Pakistan, Peru, and the Philippines, the news release said.
The MSCI Frontier Emerging Markets APEX Index includes all constituent countries of the MSCI Frontier Emerging Markets Index except those countries with material restrictions related to foreign exchange operations, material capital controls, or countries with very low liquidity in the local market and for which no liquid foreign listings exist.
The following constituent countries of the MSCI Frontier Emerging Markets Index will not be included in the MSCI Frontier Emerging Markets APEX Index: Mauritius, Sri Lanka, Ukraine, and Vietnam.
“Frontier markets are typically characterized by limited market accessibility, small company size, and low liquidity, while emerging markets are usually expected to provide higher levels of openness, investability and efficiency of the operational framework,” explained Giacomo Fachinotti, executive director and head of the MSCI Index Policy Committee, in the release. “However, some characteristics of smaller emerging markets may resemble those of frontier markets. For example, smaller emerging markets typically have few global companies and are less likely to be widely owned and researched, resulting in lower correlation with larger markets.”
More information is available here.