Now that the first frontier markets exchange-traded funds have been launched, does that mean we will see a steady trickle of these types of funds into the market?

Van Eck is the latest ETF provider to enter the area. It actually has a few frontier market ETFs in registration, and it's launching the first of them today - the Market Vectors Africa Index ETF (NYSE Arca: AFK). AFK is the first ETF to cover specifically African markets, although just last week the PowerShares MENA Frontier Countries Portfolio (NASD: PMNA), which covers the Middle East and North Africa.

The Market Vectors ETF tracks the Dow Jones Africa Titans 50 Index, which covers 50 stocks from 11 different markets on the continent: Nigeria, South Africa, Egypt, Morocco, Equatorial Guinea, Zambia, Angola, Mali, DR Congo, Kenya and Ghana. Keep in mind that the underlying index is not designed specifically to cover exclusively frontier markets in Africa; rather, it is a regional index covering African markets. African markets are mostly frontier markets, but South Africa and Egypt are examples of countries in the index typically classified as emerging-and they together make up nearly 40% of the index's total exposure.

Also, an interesting thing about this index is that many of the companies in the index are not actually domiciled in Africa but derive a majority of their revenues from African markets, with the most revenues being generated from the specific market with which they are associated. Egypt, South Africa, Nigeria, Kenya and Morocco fit Dow Jones' definition of investable markets and are represented by companies domiciled within their borders (and some that are not), while the remaining countries are represented in the index solely by offshore companies.

"The investor has the chance to invest in a pan-African portfolio while at the same time participating in the high liquidity and performance of international securities," said Van Eck Global Principal Jan Van Eck of the index.

The hybrid nature of the DJ Africa Titans 50 Index highlights one of the problems of investing in frontier markets, frontier markets offer diversification, but they are also, by definition, smaller and less liquid than emerging markets, which makes them difficult to invest in. The three ETFs currently trading that could be considered "frontier" ETFs are not really "pure" frontier.

The first fund to launch, the Claymore/BNY Frontier Markets ETF (AMEX: FRN) includes Poland, Chile and Egypt in its top three countries; all are typically classified as emerging markets by the major index providers, and together they represent more than 60% of the fund. PMNA covers the Gulf Coast and North Africa - all of its represented countries, except for Lebanon, are actually classified as emerging markets, not frontier markets, by Standard & Poor's.

A pure frontier market ETN does not actually exist yet, and AFK does not claim to be one. Nowhere in the fund's name or that of it's underlying index does the word "frontier" actually appear. However, it does provide access to some frontier markets.

AFK's underlying index is weighted by market capitalization, with the maximum weights for individual countries and companies at rebalancing set to 25% and 8%, respectively. Also, a country cannot be represented in the index by more than 15 companies.  Components must have market capitalizations of at least $200 million, with at least $1 million in three-month average daily trading volume.

The top five components are Mobile Telecommunications Co. at 7.19%, Tullow Oil PLC at 6.12%, Sasol Ltd. at 4.66%, First Bank of Nigeria PLC at 4.35% and Orascom Telecom Holding at 4.08%. Nigeria has the largest country weighting at 25.2% for domestic stocks and 7.3% for offshore stocks - a grand total of 32.5% of the index. It is followed by South Africa at 24.7% (plus 1.5% offshore), Egypt at 13.1%, and Morocco at 11.4%.

Banks are the largest sector at 33.7% of the index, followed by Basic Resources at 18.2%, Oil & Gas at 13.5%, Telecommunications at 10.2% and Technology at 7.3%.

AFK is fairly expensive, with its gross expense ratio of 1.20% waived down to a net expense ratio of 0.83%, which makes it more expensive than PMNA, which charges 0.70% after some costs are waived, and FRN, which charges 0.65%.

So far, a pure frontier market ETF has been elusive, but for investors seeking exposure to Africa and the opportunity it represents, AFK may be just the thing. However, it represents a play on a particular region, not just the frontier markets in that region.

Read the prospectus for AFK here.