Emerging-market funds have been one of the hottest investments of 2009, with investors pouring money into countries like Brazil, China and India.

But some money managers are looking beyond BRIC and other traditional markets, putting percentages into countries like Nigeria, Sri Lanka and Pakistan, known as frontier or pre-emerging markets.

In an article that forms part of the Wall Street Journal's Investing in Funds package, Ann Prior reports that many emerging-market ETFs and mutual funds are using a small percentage of frontier market investments in their portfolios, with positive results despite the Dubai's current debt crisis.

"Our performance has definitely been helped by frontier markets," Ed Kuczma, investment analyst for Van Eck Emerging Markets, told The Journal's Anna Prior. The Van Eck fund is up 111 percent year-to-date through November, and has 6.3 percent of assets in frontier markets like Kazakhstan, Georgia, Panama, Zimbabwe and the United Arab Emirates, as of September 30.

The Templeton Frontier Markets, which has about 0.8 percent of its assets in Pakistan, is up 44 percent through November. The fund invests in the Pakistani automobile, telecommunications and banking sectors.

"The outlook for Pakistan is good because of its improving economic fundamentals, narrowed fiscal and external imbalances, and higher foreign reserves," Mark Mobius, executive chairman of Franklin Templeton told Prior. Mobius expects the market to continue to grow in the next year.

The MSCI index tracks and defines frontier countries, although there is often disagreement from portfolio managers. For instance, Zimbabwe and Georgia are used as pre-emerging investments in the Van Eck Emerging Markets Fund, but are not on the MSCI Frontier Markets Index. 

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