No More New Frontiers Creates Index Problem for Hottest Stocks

Alexander the Great is said to have wept when he saw there were no more lands to conquer. For investors in a shrinking pool of frontier markets -- places like Morocco and Vietnam -- the feeling might be familiar.

As many of these nations graduate to “emerging-market” status, a closely-watched index of frontier equities is in danger of losing some of its largest and most liquid members including Pakistan, Argentina and Nigeria. With few obvious candidates to replace them, analysts at Citigroup Inc. have been sounding the alarm on what they’ve dubbed the “index problem” besetting a genre whose returns beat more-developed peers over the past five years.