What is the S&P Frontier Broad Market Index?
The S&P Frontier Broad Market Index (also known as the S&P Frontier BMI) measures the performance of markets in 34 small countries. The individual country indices that make up the S&P Frontier BMI include all publicly-listed equities that make up more than 80% of the market capitalization available in each market.
How Does the S&P Frontier Broad Market Index Work?
The S&P Frontier BMI covers 617 companies from 34 countries. Because of the small size, limited information, illiquidity and limited investability of frontier markets, the S&P Frontier BMI is calculated separately from its complementary fund, the S&P Global BMI.
For a country to be included in the S&P Frontier BMI, its market must meet various criteria concerning turnover, number of listings and foreign investor interest. For a company to be considered, it must have a market capitalization of over $100 million, must have eligible securities (stock and preferred stock availability) and relatively high liquidity (no minimum value traded requirement).
The top 10 weighted constituents by market cap in the S&P Frontier BMI can be found on the S&P Frontier BMI page.
Why Does the S&P Frontier Broad Market Index Matter?
The S&P Frontier BMI can be used as a benchmark for the global equities portion of an investor's portfolio and to track the performance of a specific emerging markets stocks, emerging markets mutual funds, or emerging markets ETFs.
Though there is no ETF that directly tracks the S&P Frontier BMI, an investor may consider simply investing in the iShares S&P Global 100 Index Fund (NYSE: IOO) to increase exposure to several of the regional markets in the S&P Frontier BMI.
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