DUST OFF YOUR ATLAS

. These days, when the American credit crisis echoes from Idaho to Iceland, and PetroChina and Societe Generale make regular headlines stateside, finding investing opportunities sheltered from the fits and starts of the global economy requires going off the grid. Way off, in fact. Countries like Nigeria, Kazakhstan and Qatar are developing tradable markets, prompting adventurous investors to break out their pith helmets. "People have become more and more comfortable investing outside the U.S.," says Todd Henry, emerging-markets specialist at T. Rowe Price. "Now people are saying, 'Where else can we go?'"

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These so-called frontier markets a catchall that includes nations as far-flung as Jamaica, Mauritius and Lithuania are in the early stages of economic development. The fall of communism in Eastern Europe, debt relief in Africa and the diversification of Middle Eastern economies all add up to a new landscape of markets poised for rapid growth. Already, the returns have been startling: Since January 2000, frontier markets have posted 20 percent annualized returns, while traditional emerging markets are up 12 percent a year and the developed world just 1 percent, according to Merrill Lynch. Traditional emerging markets, like Brazil, Russia and China, have grown dramatically over the past two decades but now tend to move more or less in step with the developed world. "In this case, small is beautiful," says Michael Hartnett, the emerging-markets equity strategist at Merrill Lynch.

But investing in frontier markets is not for the lily-livered. Emerging economies are prone to political instability (think of Ukraine's Orange Revolution or the violence that followed Kenya's most recent elections). These economies can be fragile and highly concentrated, often dominated by natural resources, telecommunications and finance. The whole concept of corporate governance is new, transparency is often limited, and markets can be volatile.

Still interested? It's best to start small: Frontier markets make up just 1 percent of world market capitalization; they shouldn't take up much more than that in your stock portfolio. There aren't many frontier funds yet, and those that do exist have short track records: With its Emerging Europe and Mediterranean fund and its Africa and Middle East fund, T. Rowe Price has the oldest retail offerings the latter launched all of nine months ago. Fidelity's Emerging Europe, Middle East, Africa fund debuted in May; PowerShares' frontier markets ETF should launch later this year. None are cheap, with expenses as high as nearly $200 per $10,000 investment.

EMERGING MARKETS, ESTABLISHED MANAGERS
Fund (Ticker)	Expense Ratio (%)
	1.5
	1.4
	1.2

Data: Morningstar

A better bet might be a traditional emerging-markets fund. Chris Alderson, who runs T. Rowe's Africa and Middle East fund, also manages the T. Rowe Price Emerging Markets Stock fund, with an assist from Leigh Robertson, who runs the Emerging Europe offering. The broader fund has about 10 percent in frontier markets, including stakes in Omani and Qatari banks. Alderson has been at the helm since 1995, and the portfolio has returned almost 15 percent per year over the past decade, better than 77 percent of the category.

With 41 countries in the portfolio, Eaton Vance's Structured Emerging Markets Stock fund uses a computer-driven strategy and tends to underweight the biggest countries China gets only a 6 percent weighting, for example in favor of Ghana and, as of late 2007, Jordan. The fund is sold only through brokers, which means investors may pay up to 5.75 percent up front, but the advisers have been investing in the markets for more than a decade. And when they get uncomfortable with a country's prospects, as they did with Venezuela last year, they divest.

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