ETF Talk

Fund Offers Exposure to Africa

As we round out our list of regional emerging markets exchange-traded funds (ETFs), this article features VanEck Vectors Africa Index ETF (AFK), a fund that tracks many Africa-based companies and invests most of its $68 million total assets in those companies.

Africa likely is a relatively untapped region for most investors, even though it offers vast commodity resources and growth potential. In fact, as far as ETFs go, AFK is almost the sole choice for broad, pure-play African coverage.

ARK offers one-stop access to a broad range of sectors and African countries, including exposure to some less traditional markets. The fund screens both local listings of companies that are incorporated in Africa, as well as companies outside of Africa that generate at least 50% of their revenues within that continent.

AFK’s index focuses on Gross Domestic Product (GDP), rather than market cap like many other emerging market ETFs. This puts an emphasis on the economic well-being of the country where a selected company is based. As a result, small- and medium-capitalization public companies often are included in the fund.

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