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Funds flock to frontiers despite risks

The least developed stock markets offer diversification angle, economic potential, managers believe.

"Because the market integration of frontiers with the other markets is lower, the risk of the whole portfolio is lower," said Kuntara Pukthuanthong, finance professor at the University of Missouri.

STOCK markets in big emerging-market countries like China, Brazil and Russia have been sagging. But the returns have been splendid for their oft-overshadowed smaller siblings - frontier markets like Kazakhstan, Kenya and Kuwait. Mutual funds that invest in the frontiers have surged, according to