Into Africa with ETFs

March 2nd at 7:00am by Tom Lydon

There are a handful of exchange traded funds that invest in Africa to explore opportunities in this frontier market if investors aren’t afraid of risk and volatility.

“Since the start of the century Africa’s substantial growth as an investment destination has been driven by improved macroeconomic fundamentals, increased political stability, higher commodity prices and robust domestic demand,” Eugene Visagie , risk manager at Novare Investments, said on BusinessLive. [Investing in the Last Frontier]

The use of ETFs to access this region is logical. The hardships associated with investing in this area of the globe such as liquidity restrictions and foreign ownership red tape are avoided with the use of an ETF. Plus, the higher trading costs, exchange controls and general lack of liquidity are not an obstacle. [Best Emerging Markets ETFs]

Visagie points out that emerging markets such as China and India have successful ETFs that track their broad market. [Africa ETFs; Exposure to a Potentially High Growth Region]

Furthermore, countries such as Nigeria are debuting their own gold ETFs, which reflects the growing interest in the region for ETF investing. Nigeria is the third country in the region to list an ETF on their exchange–Johannesburg Stock Exchange started ETF trading in 2004, followed by Botswana in 2010, reports Rebecca Hampson for Financial News. Ghana is awaiting approval to begin trading a gold ETF as well.

ETFs focused on the frontier region:

  • Market Vectors African Index (NYSEArca: AFK) Gives very broad exposure to Africa.
  • iShares MSCI South Africa Index (NYSEArca: EZA) Tracks the most developed economy in Africa.
  • PowerShares MENA Frontier Countries Portfolio (NYSEArca: PMNA) Gives investors exposure to North Africa and the Middle East.
  • Market Vectors Egypt Index (NYSEArca: EGPT) A pure play on the economy of Egypt.

Market Vectors African Index


Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.