Investing In Africa & The Chinese Connection
In last month's newsletter we highlighted the fact that China is starting to muscle in on the African Continent, trade having shot up 3 fold to $30 billion in little over a year. The Chinese are long term planners who need an inexhaustible supply of natural resources so the fit looks to be a good one
So if Africa is looking like an interesting place to invest how can we look to take advantage of it, perhaps through buying investment funds based in Sterling.
We've searched high and low and cannot actually find any UK fund that specialises in investing in Africa excluding South Africa. Nobody seems to be doing it so perhaps there's a gap in the market for some enterprising fund management company.
But we did find a specialist firm in the US called Africa Mutual Funds which has five separate funds;
- Africa Growth & Income
- Africa Large Cap Equity
- Africa Medium Cap Equity
- Africa Small Cap Equity
- Africa Bond Funds
However their website looks slightly out of date so anyone interested would be well advised to contact them personally and see what their business is all about.
The other company looking to directly invest through a fund in Africa is Imara Asset Management which is South African based. They are going to be introducing the African Opportunities Fund that will invest in the continent excluding South Africa. However the minimum investment in the dollar based fund is $100,000 which for many retail investors is too much.
Remember that all countries within Africa (baring S.A) are 3rd world at worst and emerging markets at best so the risk factor is very high. Therefore it's often a prudent decision to invest no more than 25% of an investment portfolio in the riskiest assets and even then spread that 25% around.
Summary
Investing in Africa looks an interesting concept but no company is offering an easy way in. But this will likely change over the next few years as the reduction in G8 debt and general financial assistance paves the way for better economic results. If that is the case and the economies start growing dramatically then that's likely to mean a plethora of African investment funds hitting the market. And perhaps for the shrewd investor who gets in first that might be the time to take profits.
More China/Africa News
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