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Uncertainty surrounding Nigerias election has helped depress its market, which contributed to the slump in frontiers. Agence France-Presse/Getty Images

Poor performance in the fourth quarter of 2014 has left many investors wary of frontier markets, says Gustavo Galindo, senior portfolio manager of the $300 million Russell Frontier Markets Equity Fund.

But the selloff in frontiers is also generating some opportunities to snap up beaten-down assets, he says.

The MSCI Frontier markets index and many sector funds plunged late last year in near-perfect sync with the sharp slide in oil prices. The more-than-10% downturn over the quarter erased much of the sector’s gains from earlier in the year, ending a multi-year run of strong returns.

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“A lot of people chase performance so we’re not going to see as much interest in frontier markets this year,” Galindo says. “But this is when we’ll find opportunities—those neglected gems,” he adds.

Russell’s frontier fund uses a multi-manager structure—similar to a fund-of-funds—allocating all its assets to a group of managers who then invest them on behalf of the fund. Galindo says he is increasingly hearing from managers keen to invest more in the wake of the sell-off.

“Our managers are talking about there being more opportunity, and about the growth of frontiers outperforming emerging markets’,” he says.

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Investors are listening, Galindo says, but so far “in frontiers we have seen a lot of talking, but not a lot of action.”

Despite the index’s recent poor performance, the economic growth and stock market performance in many of the key markets remain strong.

Among the countries that Galindo and his managers are most enthusiastic about are two that stand to benefit from rising costs in China’s manufacturing sector: Bangladesh and Vietnam. “The macro trend of manufacturing shifting toward those economies [from China] offers considerable potential,” Galindo explains.

As the macro growth trend strengthens, it also generates micro-economic benefits, Galindo says. “With the growth in manufacturing, you’ll see more people employed, which drives a pick-up in the consumer sector.”

In that sense, Galindo believes Bangladesh is the most promising in the longer term, despite the recent political upheaval .

Vietnam is a little more challenging: “The local market tends to be volatile so it’s difficult to find good entry points,” he says. “And for foreign investors like us, opening accounts is not as easy.”

More challenging still is one of the largest frontier economies: Nigeria. With an economy that is heavily dependent on oil, the country has suffered a steep decline in its stock market, in its currency, and in general investor confidence. The recently announced six-week delay to presidential elections has added to the uncertainty.

Even there, though, Galindo sees opportunity. “Nigeria may create targeted value opportunities,” he observes. “There are some good companies there that will be unfairly punished so there is tremendous amount of upside once the situation clears.”