ECONOMIC fundamentals matter to investors. So too do classifications. At the start of this month Nigeria became the second country in Africa, after South Africa, to join J.P.Morgan's local emerging-market government-debt index. Since the bank decided to include the country's debt in its index on 15th August, yields on Nigerian debt have dropped by an average of 400 basis points (see chart). Such dramatic moves reflect the fact that investors who follow an index-tracking strategy need to rebalance their portfolios when the composition of an index changes. Their investment decisions are, in effect, made for them by index compilers, who put countries into three broad categories: developed, emerging, and frontier. In the case of the J.P.Morgan index, a country may qualify for emerging-market status if its people have had low or middle incomes for at least two years (by the World Bank's reckoning), and if certain other conditions are met. Based on income alone, Nigeria has long been eligible. But index compilers also care about liquidity and market access. The big change for Nigeria came in June 2011 when its central bank decided to lift a rule that obliged foreign investors to hold government debt for at least a year. Similar criteria govern equity indices. MSCI, an index provider, requires a frontier market to have two listed firms that meet the required market capitalisation and liquidity levels, for example. Emerging markets need three; developed markets five. Market access is determined by things such as institutional stability and a country's openness to foreign ownership. Countries can fall as well as rise: MSCI has put Greece, whose stockmarket has plunged over the past five years, on notice that it could be demoted from "developed" to "emerging," which would be a first. Based on these criteria, the Nigerian stockmarket still counts as a frontier market. Along with Kenya, Mauritius and Zimbabwe (which sits in a "stand-alone" index thanks to its property-grabbing government), Nigeria could be among the next "emerging" equity markets. But all four must develop further first, says MSCI's Sebastien Lieblich. In the meantime, they can still benefit from investors" appetite for Africa. Last month, for instance, the iShares division of BlackRock, a fund manager, launched a frontier-markets exchange-traded fund, tracking the 100 largest stocks within MSCI's frontier index. If a country is in an index, it is always easier to find.