While the largest fund in the segment focuses on the Precious Metals rich country of South Africa, the $411 million EZA (iShares MSCI South Africa, Expense Ratio 0.64%), which debuted an eternity ago in 2003, there are several other much smaller offerings that attract interest here and there and worth mentioning.
AFK (VanEck Vectors Africa, Expense Ratio 0.79%, $73 million in AUM) only averages about 10,000 shares traded on an average daily basis in the trailing three-month period. AFK has had rather flat asset growth in 2017 and is the only “broad based” Africa equity focused ETF currently available in the U.S., as other funds such as EZA have single country focuses.
AFK owns eighty-five individual equities, and as one might expect in looking at the size of the South Africa based market capitalization weighted EZA, has its highest single country exposure to you guessed it, South Africa. In fact, when we look at the single country exposures within AFK it will become apparent that the companies owned may “operate” in Africa in terms of their lines of business but in many cases the companies themselves are based somewhere else (i.e. The United Kingdom or Canada for instance).
With many continental African countries being considered Frontier markets in terms of the maturity of their economies and stock markets, the challenges involved in creating a broad based “Africa” equity ETF become apparent especially when looking at the specific design of AFK. Exercises like these make sense for ETF investors and portfolio managers to check under the hood to look at specific index design and exposure before ultimately investing.
Weightings within AFK are as follows: 1) South Africa (30.06%), 2) United Kingdom (11.42%), 3) Egypt (10.02%), 4) Canada (8.53%), and 5) Morocco (7.15%).
The two other fund offerings that hone in on Africa Equity exposure are smaller funds, NGE (Global X MSCI Nigeria, Expense Ratio 1.10%, $66 million in AUM) and the $54 million EGPT (VanEck Vectors Egypt, Expense Ratio 1.01%). Both funds have smaller but still respectable asset levels, and given the fact that there are only four “Africa” focused funds in the marketplace presently, there is clearly growth potential here in the future for ETF issuers and further fund offerings.
The VanEck Vectors Africa ETF (NYSE:AFK) was trading at $23.40 per share on Wednesday afternoon, up $0.21 (+0.91%). Year-to-date, AFK has gained 18.24%, versus a 10.44% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.