It was relatively recent that both FTSE and MSCI added frontier markets to their global index families. Dow Jones, another major index provider, is dabbling in the area through its DJ Titans index family. And S&P pioneered the concept when it launched the S&P/IFCG Extended Frontier 150 Index in August 2007. Over the next few weeks and days we’ll profile each frontier market index, while also breaking down some specific mutual funds, hedge funds and ETFs that are frontier dominated.

First up is the FTSE Frontier 50 Index, charted below. The index, which was launched on July 29th, covers 23 markets. Banks constitute roughly 75% of the index, and from a net market cap weight percentage, Nigeria (21%), Qatar (18.5), Jordan (15.2) and Cyprus (12.5) receive the most attention. Finally, the Top 10 constituents, totaling around 60.5%, are as follows: (1) Arab Bank, Jordan (11.1%); Qatar Industries, Qatar (Chemicals); Bank of Cyprus, Cyprus; First Bank of Nigeria PLC, Nigeria; Zenith Bank PLC, Nigeria; Marfin Popular Bank, Cyprus; Qatar National Bank, Qatar; Intercontinental Bank PLC, Nigeria; United Bank for Africa PLC, Nigeria; Gulf Finance House, Bahrain (3.83%).

The Index highlights a common problem among frontier market indices and funds alike. Namely, they are often far too focused on one sector and/or country (in this case, Nigeria and banking) to be truly accurate indicators of the “frontier” as a whole. Assuming such indicators even exist, of course. But to argue, for example, that the state of frontier markets is floundering, merely by measuring a handful of banks scattered across several countries, would be inaccurate.