There used to be few exchange-traded fund (ETF) options for gaining exposure to African markets. However, while there still isn’t a plethora of funds targeting Africa, there are more now.
You can choose from company-specific ETFs or even those that target all of Africa. Here are some of the most popular Africa ETFs that can give you access to the continent.
- Over the last few years, investors have gained more ways to invest in exchange-traded funds from Africa.
- The Africa ETFs mostly comprise financial, consumer discretionary, materials, consumer staples, and communications holdings.
- Some of the Africa ETFs have derivatives in their holdings that can create more risk for certain investors.
AFK - Market Vectors Africa ETF
AFK follows the Dow Jones Africa Titans 50 Index. This index focuses on companies that are located in Africa and are listed on the African Stock Exchange. These companies also 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. As for the benchmark, the weighting of a country in the index is determined by the size of its gross domestic product.
Along with holding equities, AFK also uses derivatives such as forwards, futures, swaps, and options 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.
EZA - iShares MSCI South Africa Index ETF
EZA targets South Africa by tracking the MSCI South Africa Index, which focuses on 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 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.
The Africa ETF market is still growing, so you'll find holdings from many of the same companies within the different funds.
NGE - MSCI Nigeria ETF
The MSCI Nigeria ETF attempts to mirror the MCSI All Nigeria Select 25/50 Index performance with extra holdings. The index and the ETF are both primarily made up of consumer staples, financials, and materials. Top holdings in the ETF are Dangote Cement, Guaranty Trust Bank, Zenith Bank, FBN Holdings, and Sterling Bank.
If Africa is where you want to be (investment-wise), you should research some Africa ETFs and see whether they fit your portfolio. While some of these funds may be attractive, be sure to conduct thorough research before you make 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. Take a look at what is in the funds, as many ETFs may contain derivatives such as futures and options.
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, it’s only a matter of calling your broker (unless you trade online).
Frequently Asked Questions (FAQs)
How do you invest in an Africa ETF?
ETFs are exchange-traded; you buy and sell them like stocks. You'll need access to the market through a brokerage account. Once you have access, you simply place a trade order during market hours to buy the ETF you want.
Why should someone invest in Africa?
African investment attracts investors seeking high-risk/high-reward opportunities. African economies are typically smaller than others like the U.S., but that means they have more room to potentially grow. These opportunities may not be appropriate for all investors, so consider your overall investment goals and current holdings before risking your money on these ETFs.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.