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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.

[InvestingAnswers Feature: 10 Must-Know Emerging Markets ETFs]

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.