Forum Topics Investing in Africa
Gromit
2 weeks ago

Interesting Read

I know Zim govt offers an app like raiz to invest with a 3 to 4 % commision 

Simply Wall Street offers valuations on a few country's on the mother land 

Barclays bank in Southern Africa Zenith bank in Nigeria 

Zim also buy direct with an accredited Zim stock exchange there's about fifty companies listed 

Goodluck 

I've considered some of these options but find it a littlehard 

 

 

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Gromit
2 weeks ago

More thinking direct than with a fund mind you 

 

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MAUOMBO
2 weeks ago

is there a fund that gives exposure to Africa?

 

 

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Bear77
2 weeks ago

I can't find an Australian ETF that is solely focussed on Africa @MAUOMBO, however there are a few available in the USA:  https://etfdb.com/etfs/region/africa/

The best one appears to be VanEck Vectors Africa Index ETF (AFK)

Back home, we have three emerging markets ETFs that include African companies, as described here: https://www.bestetfs.com.au/2020/12/12/best-etfs-2021-3-top-etfs-for-emerging-markets/

The first is the iShares MSCI Emerging Markets ETF (ASX: IEM) which provides exposure to over 800 large and mid size companies in emerging markets globally. The fund tracks the performance of the MSCI Emerging Markets Index before fees, and has returned 11.57% per annum over the past 5 years and 27.27% in the past 12 months.  Distributions are made twice yearly and management fees are 0.67% per annum. The fund had a P/E (Price/Earnings) ratio of 19.87, a P/B (Price to Book value) ratio of 2.18 and a 12 month trailing yield of 1.22% at 6th April 2021 (yesterday).

Of the fund’s holdings, 39.43% were located in China, 13.62% in Taiwan, 13.09% in South Korea, 9.29% in India, 4.23% in Brazil, 3.49% in South Africa, and 2.79% in Russia. The remainder were spread across Saudi Arabia (2.52%), Thailand (1.81%), Mexico (1.58%), and other jurisdictions (8.15%).

Top holdings include Tencent Holdings, Alibaba, Taiwan Semiconductor Manufacturing, Samsung Electronics and Meituan.

It's far from ideal for African exposure, since less than 5% of the portfolio is in Africa, and almost 40% of the portfolio is invested in China.  Click here for the ASX page on IEM.

Next, we have the Vanguard FTSE Emerging Market Shares ETF (ASX: VGE) which seeks to track the return of the FTSE Emerging Markets All Cap China A Inclusion Index (with net dividends reinvested) in Australian dollars, before taking into account fees, expenses and tax. VGE invests in the Vanguard FTSE Emerging Markets ETF listed on the New York Stock Exchange Arca (NYSE Code: VWO), which seeks to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index in USD and invests in stocks of companies located in emerging markets around the world, such as China, Brazil, Taiwan, and South Africa.  The majority of NYSE:VWO (and therefore VGE) is invested in China, similarly to IEM.  VGE's management costs are 0.48% p.a. and their distributions are Quarterly, in March, June, September and December.  4.11% of VGE is invested in South Africa according to the ASX page on VGE.

Then there is the Fidelity Global Emerging Markets Fund (ASX: FEMX), the most aggressive choice of the three emerging markets ETFs. It is an active ETF with a management fee of 0.99% per year (but happily, no additional performance fee). There is an argument for having active management in emerging markets because of the volatility and lack of transparency common to many of these markets. So far, portfolio manager Alex Duffy has done a good job of proving the higher fee is worth it.  As at 31 March 2021, FEMX has produced a 12-month net return of 37.82% vs. their benchmark (MSCI Emerging Markets Index NR) which has returned 27.28%.  VGE and IEM have slightly underperformed their benchmark index, as most index-tracking ETFs tend to do because they aim to replicate the return of the index and then they have management fees that the index does not have.  While the management fees are small (VGE: 0.48%, IEM: 0.67%), they still cause those ETFs to slightly underperform their benchmark.  As an active ETF, FEMX has provided +10.54% (net) of outperformance and the additional management fee is only half a percent (+0.51%) more than VGE and a third of a percent (+0.32%) more than IEM, so well worth the tiny extra annual management fee (and no performance fees).  Since inception (29-Oct-2018), FEMX has returned 23.19% p.a. vs their benchmark return of 14.21% p.a., being outperformance of +8.98% p.a.

FEMX is also more diversified geographically, with 7.4% of their portfolio invested in South Africa, and "only" 25.8% invested in China.  If interested, click here and then scroll down for more info.

In summary, our range of emerging market ETFs only provide you with a small African exposure, with FEMX providing more (7.4%) than VGE (4.11%) and IEM (3.49%), and all three of those ETFs appear to confine their African exposure to South Africa (i.e. JSE-listed companies, JSE being the Johannesburg Stock Exchange).  For pure African exposure, it looks like you have to invest in a USA ETF like the VanEck Vectors Africa Index ETF (AFK).

Hope that helps.

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MAUOMBO
2 weeks ago

thank you

I was considering FEMX, but I will check out the others too

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