We spoke about Frontier Markets recently and access to this segment via equity ETFs, and this dovetails nicely into a brief discussion of Africa based equity ETFs.
EZA (iShares MSCI South Africa Index, Expense Ratio 0.60%) has the longest tenure in this space, having debuted in 2003 and amassing approximately $664 million in assets under management since inception. EZA as its name suggests is single country focused, offering exposure to the country of South Africa (fifty one holdings) and heavier concentrations in the Communication Services and Financial Services sectors (25.51% and 23.94% respectively).
A more recent entry into this space is AFK (Market Vectors Africa Index, Expense Ratio 0.78%) which first started trading in 2008 and has raised $104 million since then. The fund does not trade a ton of volume currently (30,936 shares in ADV) and its targeted exposure is to the continent of Africa via the Dow Jones Africa Titans 50 Index.
Specific countries that are well represented in the underlying index include Nigeria (26.1%), South Africa (24.15%), Egypt (14.77%), and Morocco (10.04%). It is also interesting to note that several of the other equity positions in this index are domiciled outside of Africa as the United Kingdom (16.67%), Canada (3.84%), and Norway (2.48%) for example are included here.
AFK has staged an impressive winning streak in the past several sessions and is currently trading at its highest levels since the very beginning of 2013. Other ETFs categorized in the greater “Africa” space include the smaller EGPT (Market Vectors Egypt Index, Expense Ratio 0.94%) and NGE (Global X Nigeria Index, Expense Ratio 0.68%) which as their names suggest, are country specific plays.
2013 has been a good year thus far for both EZA and AFK, with the funds pulling in $143 million and $19 million respectively.
Trading volumes will tend to be less and average bid/ask spreads may also be wider than may be expected in some of the aforementioned names, so the utilization of a trading desk with advanced tactics in locating liquidity and dampening any potential price impact of sizable investment allocations is prudent.
iShares MSCI South Africa ETF
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
Street One Financial is an educational/research firm utilizing the Broker Dealer services of GWM Group Inc (RLCC) a FINRA registered Broker/Dealer. All trades are executed through GWM Group (RLCC) and cleared by Fidelity (NFS)DTC number 0226. Street One Financial LLC makes available products and services offered by GWM Group Inc., a registered broker-dealer and Member Securities Investor Protection Corporation (SIPC), Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.