Feeling bold? Then buy into Zimbabwe

Frontier spirit is in short supply among investors. The newest emerging markets have had a terrible year, falling 59% over 12 months against a 25% drop for the MSCI Emerging Market Index. But for those prepared to be greedy when others are fearful, valuations are "extremely attractive" in the long term, according to last month's report from Bank of America-Merrill Lynch.

Take Africa. Falling commodity prices have hurt Nigeria, Zambia and Botswana, countries that are heavily dependent, respectively, on oil, copper and diamond exports. Botswana's GDP is likely to fall by 7% this year, for example, while the Zambian Kwacha has depreciated by 43% against the US dollar since January. Yet overall, sub-Saharan Africa will still grow at 3.5% this year, according to the IMF, and the continent will account for 15 out of the 20 fastest-growing countries in 2009.

Meanwhile, frontier markets as a whole now trade at a 29% discount to emerging markets, says Bank of America-Merrill Lynch, and a 42% discount to developed markets. That makes them "a tempting laggard play on any further bear market rallies in commodity and risk". Their analysts' top pick is Qatar, which should grow by 5% this year.

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However, there are opportunities elsewhere too. "In five to ten years' time, the traditional emerging markets will be too developed and the focus will shift over to the next block of countries, such as Nigeria, United Arab Emirates and Vietnam," says Andrea Nannini, manager of the £46m HSBC New Frontiers fund in the Financial Times.

For investors looking for something extra bold, the Imara Zimbabwe Fund (minimum investment $100,000) is up 120.9% so far this year. Zimbabwe, seriously? Trading on valuations of one to two times forward earnings, it "looks incredibly interesting", says Andrew Lister, a manager with Advance Frontier Markets investment trust (LSE: AFMF) , with a 30% exposure to Africa.

"Lots of regional managers are watching and waiting" now that the Zimbabwe dollar has been scrapped and the economy and stockmarket dollarised. "And remember, this was once the second largest stock exchange in Africa. It boasts about 70 listed companies, so is no Senegal or Uganda." If you aren't quite ready to buy into Zimbabwe, then you could look at the broader-ranging HSBC New Frontiers fund (tel. 020-7992 4172), up around 6% this year, or the aforementioned Advance Frontiers trust, up 8%.