"The BRICs are looking more developed so people are looking for the next new frontier," said Graham Toone, head of research at AFH Wealth Management.
Ben Willis, financial adviser at Whitechurch, added: "Investors are looking for markets that are in the position that the BRICs were in five or 10 years ago."
Performance of indices over 5-yrs
Source: Financial Express Analytics
Emerging market specialist Fidelity International has identified Indonesia as the most BRIC-like of the frontier markets. Teera Chanpongsang, manager of Fidelity’s Emerging Asia fund, says its 245m-strong population, added to government targets to make Indonesia one of the world’s 10 largest economies by 2025, makes the country a compelling prospect for investors.
"The long-term outlook for countries such as Indonesia and the Philippines is supported by a powerful mix of favourable demographic factors, including quite large populations that are dominated by young people whose disposable incomes are rising," said Chanpongsang.
Nick Price, who manages the Fidelity Emerging Europe Middle East and Africa (EMEA) fund, points out Turkey has bounced back strongly from the global downturn.
"In recent years, Turkey has made good progress in terms of implementing reforms and improving its infrastructure whilst retaining its fiscal discipline," he said.
"GDP per capita has more than doubled in the last decade while the country is set to benefit from favourable demographics, with around a quarter of the country’s 70m-plus population under the age of 15."
Mexico has been identified by Alex Duffy, co-manager of Fidelity’s Latin America fund, as an exciting frontier prospect.
"Mexican economic performance tends to be quite well correlated with that of the US, largely due to its dominance as a manufacturing hub for its northerly neighbour," he said.
"Five years ago, the labour cost of a Mexican worker was 260 per cent more expensive than a Chinese worker. That premium has steadily eroded over time and Mexican goods are once again taking an increasingly larger percentage of imports into the US."
"We have a fairly positive outlook on the US recovery, so Mexico stands to benefit as a result."
Independent financial advisers are seeing significant interest from high-risk investors looking to make significant returns on their capital by playing these frontier economies.
"We’ve been having meetings with Fidelity about these markets so they are certainly on our radar," said Toone. "Some of our more speculative investors are likely to be interested."
Willis says that investors can expect volatility and a high risk of political upheaval in these markets and therefore advises speculators to be cautious.
"Mexico is held in a lot of emerging market funds but I’m not sure it has done that well recently," he said. "Investing directly in these so-called MINT economies is highly speculative. The best way to allocate to these markets is to invest in a fund like Franklin Templeton Templeton Frontier Markets."
Franklin Templeton Templeton Frontier Markets has returned 83.8 per cent over three years, slightly less than the average emerging market fund, which has returned 118.4 per cent.
Performance of sector vs fund since Oct-08
Source: Financial Express Analytics
"There are emerging market funds with exposure to even more juvenile markets so investors would have the exposure without the risk of investing directly," Willis finished.