Invest in Africa With These African ETFs
It used to be the case, that there were not many ETF options for gaining exposure to African markets. However, while there still isn’t a plethora of funds targeting Africa, there are more ETF choices. From South African funds to AFK, which targets all of Africa, there are some different ways to give your portfolio access to the region. So let's start with the most popular Africa ETF:
AFK - Market Vectors Africa ETF
AFK follows the Dow Jones Africa Titans 50 Index, which focuses on companies that are located in Africa, are listed on the African Stock Exchange or conduct 50% of their business in the region. AFK targets a broad range of sectors and African countries, including exposure to some less traditional, frontier markets.
And along with holding equities, AFK also uses derivatives such as forwards, futures, swaps and option that help track the correlating index. Some of the top holdings in the fund and index are Nigerian Breweries, Tullow Oil, Attijariwafa Bank and Orascom Construction. And as for the benchmark, the weighting of a country in the index is determined by the size of its gross domestic product.
EZA - iShares MSCI South Africa Index ETF
EZA targets South Africa by tracking the MSCI South Africa Index, which targets publicly traded securities in the South African equity market. Some of the top holdings include MTN Group, Sasol LTD, and Naspers LTD. Some of the top sectors represented in the fund are Financials, Materials, Telecommunications and Consumer Discretionary.
GAF - SPDR S&P Emerging Middle East & Africa ETF
GAF targets both Africa and the Middle East by correlating with the S&P Mid-East and Africa BMI Index (STBMMEU). It includes some of the same top holdings as EZA but also includes AngloGold, Impala Platinum, and Firstand. Some of the top sectors represented in the SPDR are Financials, Materials, Telecommunications and Consumer Discretionary.
SZR - WisdomTree Dreyfus South African Rand ETF
SZR is now delisted but was a foreign currency ETF that tracks the Rand as compared to the US dollar. Some of the holdings will include some securities in order to emulate the current currency and money-market rates in that region.
So if Africa is where you want to be (investment wise), then research some of these Africa ETFs and see if they are a fit for your portfolio, but that is the current list we have as of now. However, be sure to check back often as I will update this list as needed. If new funds are approved I will add them to this list, or if any stop trading, I will remove them from this list.
And while some of these funds may be attractive, be sure to conduct thorough research before making any trades. Check the history of the ETF, understand the risks, watch the fund in action and see how it reacts to different market conditions. Also, take a look at what is in the funds as many ETFs may contain derivatives such as futures and options.
And if you have any questions or concerns, be sure to consult a financial professional, such as a broker or advisor. However, once you are comfortable with these Africa ETFs, then it’s only matter of calling your broker (unless you trade online). And once you do make your choice, then good luck with all of your trades.