Launches widen routes into Africa for retail investors

by Daniel Ben-Ami

Investment in Africa is becoming ever more accessible to the retail market. Last week three more groups announced the launches of funds that are within reach of private investors.

Charlemagne Capital, a specialist emerging markets fund group, is launching a sterling share class for its Magna Africa fund. The Ucits fund, managed by Gabor Sitanyi, will have a minimum investment in sterling of £10,000. It already has a euro share class with a minimum investment of €5,000 (£3,400).

T Rowe Price is adding an Africa fund to its Luxembourg-domiciled Sicav, to be managed by Christopher Alderson, with a minimum investment of $15,000 (£7,500) and minimum subsequent investment of $1,000. It is also launching a Middle East fund along similar lines.

All these funds will have the bulk of their asset allocation outside the resources sector, which dominates these economies. Financials and wireless telecoms are among areas that are expected to grow as the continent develops.

“Typically when people look at Africa they think of commodities,” says Varda Lotan, a director of Charlemagne. “But ours is quite a diverse portfolio.”

Meanwhile, Lyxor is launching a London-listed South African exchange-traded fund (ETF) along with an Indian one. Since ETFs trade like shares there is no official minimum investment.

Daniel Draper (pictured), head of Lyxor ETFs for the UK, Ireland and the Nordic region, says there are advantages in investing in emerging markets through ETFs. Competition between stockbrokers selling the fund helps to keep transaction costs down while, unlike with conventional funds, it is possible to trade during the day. He concedes that the fund could have liquidity problems if the underlying companies suffered them, but says such difficulties would be more severe with conventional open-ended funds.

As reported in Fund Strategy (August 20, page 7) New Star is seeking regulatory approval for its Heart of Africa fund, which will be open to retail investors. Stanlib, the asset management arm of Standard Bank of South Africa, has also recently launched a South Africa Equity fund and Africa Equity fund with minimum investments of $50,000.

Investec has several offshore Africa funds available to British investors. BGI has a South African ETF, the iShares MSCI South Africa Index Fund, which is listed on the New York Stock Exchange and only trades in multiples of 50,000 shares.