Back in July 2008, Market Vectors launched an exchange traded fund (ETF) that invests in companies on the continent of Africa. The index is the Dow Jones Africa Titan 50 Index, and the highlight of this ETF is that it tracks the entire continent of Africa, not just the region of South Africa.
Market Vectors Africa (AFK) is currently down 19.7% since its July 22 inception, with $5.7 million in assets.
The downside to the timing of the ETF launch is that this part of the world is afflicted with political, economic and social stress, while the credit crisis and Presidential elections in the United States are just adding to the ills, reports Camari Ellis for Seeking Alpha. Egypt even has its own set of woes to overcome.
The basic elements surrounding this fund and the area which it represents is rich, however, and gains are possible after the downside risk of the political regions are tamed. Africa is abundant in natural resources, including oil, natural gas, coal, gold, diamonds and copper. Investors from United States, India and China have their sights on this region, and free business enterprise will prevail along sub-Saharan Africa if the issues can be resolved.
The region’s potential can also be maximized through:
- iShares MSCI South Africa Index (EZA), down 23.6% year-to-date
- SPDR S&P Emerging Middle East And Africa (GAF), down 20.1% year-to-date
- WisdomTree Middle East Dividend (GULF), launched on Aug. 5; 12.6% in Egypt, 9.9% in Morocco
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.