Africa ETF Launched: Market Vectors-Africa Index ETF (AFK)

This week was the launch of a new ETF called Market Vectors-Africa Index ETF (NYSE: AFK) for US investors looking to place investments in Africa.  We have covered this section of emerging markets and frontier markets as most of sub-Saharan Africa is one of the last major population and geographic areas that would still be considered a true emerging market for investors. 

Market Vectors-Africa Index ETF (NYSE: AFK) offers investor’s access to a fast-growing, relatively untapped market that is becoming increasingly sought by investors looking beyond existing international investment opportunities. The "AFK" ETF is designed to track the Dow Jones Africa Titans 50 Index, a rules based index intended to give investors access to the overall performance of companies that are headquartered in Africa or that generate the majority of their revenues in Africa.

The Dow Jones Africa Titans 50 Index is a freshly launched index.  Its market participants have direct or indirect exposure to the 11 markets of Angola, Democratic Republic of the Congo (DR Congo), Egypt, Equatorial Guinea, Ghana, Kenya, Mali, Morocco, Nigeria, South Africa and Zambia all in Africa.  The index is weighted by float-adjusted market caps; and each country’s weight is capped at 25% with weights of individual components capped at 8% with a maximum of 15 companies per country. Companies in the index must also have a minimum market cap of $200 million and a minimum three-month average daily trading volume of $1 million.

The five countries currently representing the investable universe are South Africa, Egypt, Kenya, Nigeria and Morocco.  Other African countries represented where the offshore companies generate the majority of revenues are Angola, DR Congo, Equatorial Guinea, Ghana, Mali and Zambia. It also appears that three largest sectors currently represented in the index are basic resources, banking, and oil & gas.  Based on Africa’s history, those break-downs are unlikely to change in the near future.

We have covered many other opportunities for our longer-term investors who seek information on how to invest in Africa and other emerging markets.  We also want to expand this coverage as we feel this is one of the largest opportunities for investors in the decade ahead.  Key articles on investing in Africa are as follows:

• Africa: The Final Emerging Market Frontier
• Big IPO: Safaricom in Kenya

Jon C. Ogg
July 16, 2008