The African investment thesis is an enigma wrapped in a riddle
cloaked under a veil of high risk. To some, the world's
is the last investment frontier
. Other investors know no more of Africa than the iShares MSCI
South Africa Index Fund (NYSE:
) and maybe the Market Vectors Egypt ETF (NYSE:
With those two ETFs, investors can gain access to two of
Africa's largest economies, but the resource-rich continent is
home to some other high-flying markets that some investors
believe are practically inaccessible.
Two of the continent's best markets on a year-to-date basis,
Kenya and Nigera, are flirting with gains of 40 percent,
according to Investing In Africa
. Unheralded Uganda is up 24. 5 percent.
Two Good Ideas
Nigeria, an OPEC member, is Africa's top oil producer, but
despite that status, a paltry amount of ETFs offer exposure to
the country. Three to be exact, though ETF sponsors have filed
plans of Nigeria funds that have yet to appear. For now,
investors that want some Nigerian exposure can choose between the
Market Vectors Africa ETF and the newly minted iShares MSCI
Frontier 100 Index Fund (NYSE:
Nigeria accounts for 19.5 percent of AFK's weight and 12.4
percent of FM's weight, respectively. FM does not offer much
exposure to Africa beyond Nigeria, but the lower correlation of
to developed market equivalents
makes this fund compelling.
The Guggenheim Frontier Markets ETF (NYSE:
), which has $154.6 million in assets, has a 4.2 percent weight
By Way Of Energy
One thing that this made clear by the country allocations of the
limited amount of ETFs that do offer exposure to Africa is that
gaining exposure to the continent's sub-Saharan region without
including South Africa is tricky. Most ETFs that do offer decent
weights to Africa allocate those weights to South Africa and/or
Egypt. Perhaps Morocco, but almost never to countries such as
Ghana or Uganda.
Both of those nations are home to burgeoning oil industries,
and as was mentioned earlier, Ugandan equities are soaring this
year. Investors can use the iShares S&P Global Energy Sector
Index Fund (NYSE:
) to get some exposure to Africa's new oil hot spots beyond
Nigeria. The$1 billion iShares S&P Global Energy Sector Index
Fund is home to Chevron (NYSE:
), Total (NYSE:
) and other major U.S.-listed integrateds with significant
BG Group, active in Uganda, and Tullow Oil receive small
weights in the ETF. Tullow has a presence in Ghana, Kenya and
Another oil ETF to consider is the iShares Dow Jones U.S. Oil
& Gas Exploration & Production Index Fund (NYSE:
). That fund offers one of the largest weights to Anadarko
) at almost 7.6 percent.
Texas-based Anadarko has one of the deepest African profiles
of any U.S. oil firm with operations in Ivory Coast, Ghana,
Liberia, Sierra Leone, Kenya and Mozambique.
For more on Africa ETFs, click
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.