As the leading player in the frontier markets index space, S&P is in a prime position to take advantage of increasing investor interest in those markets. And it has been.

Back in August it launched the S&P/IFCG Extended Frontier 150 Index, which included companies from the S&P Emerging Markets Database that are not included in S&P's investable emerging markets indexes. On Monday, it rolled out a subset of that index, the S&P Select Frontier Index.

The new index includes 30 of the largest and most liquid components of the broader benchmark. It has a total market capitalization of $46.93 billion, and individual components must have market capitalizations of at least $100 million; their weights are capped at 10% of the index. Components must also meet certain liquidity requirements. The weight of individual countries is capped at 30% of the index, and no country can be represented by more than five companies.

The index includes nine countries, most of which are not included in other index providers' families at all. Pakistan has the heaviest weighting in the index at 28.97%; interestingly, it was recently removed from the FTSE Global Equity Index Series in FTSE's annual country classification review. The Middle East—including Pakistan, United Arab Emirates, Jordan and Kazakhstan—represents about 72% of the index; Asia represents 12.55%; South America 13.98%; and Europe, represented by Bulgaria, 1.05%.

Pakistan, the largest country, also is the domicile of the index's largest company, MCB Bank Limited, which has a 10.23% weighting and a market capitalization of $8.71 billion. The smallest company, by contrast, is only about $140 million, and the average market cap of all the components is $1.56 billion. The top 10 companies represent roughly 64% of the index; all five of Pakistan's components are included in the top 10.

Performance has been highly divergent from that of the S&P 500 in the last 12-month period. The S&P 500 was up 2.03% for the three months ended September 30, while the Select Frontier Index was down 5.61%. For the one-year period ended September 30, the Select Frontier Index was up just 4.16% versus a 16.44% rise in the S&P 500. The two indexes have a correlation of just 7%, while the correlation between the Select Frontier index and the S&P Broad Market Index, which covers S&P's full global universe of institutionally investable stocks, is just 17.5%. A recent S&P report published with the launch of the index says that the correlation between frontier and developed markets in the past several years has remained well below 50%, while the correlation between emerging and developed markets has been consistently above 80%.

The S&P Select Frontier Index and its parent index, the S&P/IFCG Extended Frontier 150, are unique. Although MSCI and FTSE have both said they are working on developing frontier market indexes, the final results of such efforts are a ways off. For now, S&P is largely alone in a potentially hot market. Not surprisingly, with 30 companies selected for size and liquidity, the S&P Select Frontier Index is clearly designed to be used as the basis for products. Add in the fact that the ETF market is looking for new areas to grow into, and it seems likely that a frontier markets ETF will be turning up sooner or later.