company’s primary product is motherboards for personal computers sold to U.S. consumers, the stock moves in sync with stocks of U.S. electronics manufacturers. In contrast, a South Korean company that focuses on products for Asian consumers is more likely to offer the desired diversification. Similarly, shares in a U.S. manufacturer of heavy equipment may provide international exposure if the company’s business is driven by the rapid growth of infrastructure improvements in the developing world.

Emerging markets such as the BRIC nations, with their growing economies and millions of new consumers, are by now a well-established story. While investing there in specific industries and companies still presents great opportunities, one shouldn’t overlook a new set of emerging markets, dubbed the frontier markets, in Africa, the Middle East and small Asian nations such as Vietnam. These countries offer a number of investment opportunities that tend to have lower correlation with developed markets—and even other emerging economies. Because frontier markets are relatively unaffected by the economic movement of the rest of the world, they may represent a significant source of diversification for the selective investor who is willing to maintain a long-term investment horizon and accept a higher degree of risk.