The UAE has all the right fundamentals to be upgraded from frontier to emerging market status, a global investment management company said.Russell Investments has recently classified the UAE as an emerging market as opposed to the frontier market designation given by Morgan Stanley Capital International (MSCI) and Standard and Poor's. The UAE is the first Gulf Cooperation Council (GCC) country to graduate from frontier to emerging market status within the Russell Global Index series.Scott Crawshaw, portfolio manager of the investment division at Russell Investments, said the classification is driven primarily by the company's index group. He said the UAE is more appropriately classified as emerging rather than frontier."When we're considering markets to be promoted from frontier into emerging space, there are a couple of things that we look at," he said. "One is the economic development of the markets, and clearly many markets in the Middle East meet hurdles from that perspective."But then we're looking at other areas in terms of the development of the capital markets, in terms of the legal framework around markets, but also importantly, the breadth in liquidity."The upgrade is expected to increase foreign fund inflows to the region and put the UAE on the radar of investors worldwide."Probably it means more for the development of the market than it does for the underlying investors in that market," Crawshaw said, speaking on the sidelines of the Middle East and North Africa Investment Management Forum in Doha."Clearly, if you are investing in a passive index vehicle, when that market comes into the index, then you know that the broad passive investors will take up more interest and take up more investments in the market. It can have short-term benefits in terms of raising the profile of perhaps the valuation.""Investors should really consider more what the fundamentals are for the market rather than whether it's in the index or not. But the emerging market classification does give you some degree of comfort as an investor," he added. "But to be quite frank, there are different types of risks across all emerging markets and investors should be aware of that in any case."The UAE is currently designated as frontier in the MSCI and S&P. It is, however, under review by MSCI for a potential upgrade to an emerging market classification, along with Qatar and Jordan. Restrictions on foreign ownership limits as well as low liquidity levels are reasons why many of the GCC countries are classified as frontier by most index compilers.Crawshaw added that other countries in the region such as Qatar and Saudi Arabia have clearly demonstrated they deserve higher index status as well. "Also, from an economic wealth perspective, the region is very high, increasingly higher than most of the developed world, so it doesn't really fit with frontier markets."