A Nigerian prince approaches you about a lucrative financial opportunity...or investing in Africa.

Members present: Brian, Bickford, and Danak

We started talking about EWZ, which has been the bane of our portfolio for some time now. Is it time to get out? If not now, when, and why?

Next, we decided it was high time to compare some potential investments in Africa. The table below outlines some of the pros, cons, and mysteries of a few prominent Africa ETFs. Most of the information from this was gathered from Morningstar as well as the holdings pages from the various funds themselves.

Fund	Pros	Cons	Good/Bad?
EZA	·      Mostly Africa ·      Heavy consumer discretionary ·      Good expense ratio	·      Heavy in financials ·      Low diversification of holdings
GAF	·      See above	·      Only slightly more diversified than EZA
AFK	·      Good expense ratio ·      Good diversification in both holdings and countries	·      47% financials ·      13% energy
NAFAX	·      17% Industrials ·      14% Consumer Cyclical (These are sectors we don’t have a lot of)	·      Heavy in financials (23%) ·      High expense ratio (2.5%)	10% of the fund is Nigerian Treasury Bonds.
WAFMX	·      Good diversification in holdings ·      50% Consumer Defensive (staples) ·      20% Consumer Cyclical	·      High expense ratio (2.25%)
CAFRX		·      Really strange, with lots of moving parts. See next column	·      Two different indexes in its top holdings. (EZA as 18%, AFK as 14%)
EGPT	·      Diversified well by company ·      Not super-heavy in Communications (17%) and Financials (15%)	·      Egypt may be a volatile state to invest in	·      58% of the fund is small companies
MES		·      46% Financials
GULF		·      High in Financials and Communications

Looking at this, there are reasons to not invest in all of these. However, we didn't do this sort of pro/con analysis for our previous investments. NORW was 50% Energy, but we ended up using to balance our portfolio. Right now, we want to avoid going too heavy in Telecom.

For next week:

• Do we try to balance our portfolio, or do we try to get into Africa? 
• It might be nice if our portfolio was eventually less than 20% in anything. 

Profit!

T̶h̶e̶ ̶D̶a̶r̶k̶ ̶C̶o̶n̶t̶i̶n̶e̶n̶t̶ Like No Place Else!

Brian, Bickford, Danak

For this week

EZA (South Africa index)
NAFAX (Nile Pan-Africa Fund)
WAFMX (Wasatch Frontier Emerging Small Countries Fund)

We took a look at EZA, particularly at the components of the fund. In poking around, Brian came up with some articles that discussed how some funds will sometimes not necessarily reflect the country they are based in. While this is not a bad thing in itself, it may not be ideal if we are trying to focus on a specific economy, as opposed to the global economy.

One component of EZA, MTN Group , is a telecom company that does a lot of business with Iran. Even though this is a South Africa-based company, it would probably be affected by events in Iran and abroad. This is something to consider when choosing this as a possible investment.  

Next, we took a look at NPN (Nuveen Pennsylvania Municipal V?), the second largest holding, and we had a hard time figuring out what it has to do with a South Africa index. Some googling brings up NPNSJ, which is a South Africa media company. That makes more sense, and like when you're doing math and get some kind of garbage answer out of your calculator, you have to call it and look a litte deeper. Did Yahoo make a mistake? Definitely: A look at the ishares summary for the fund shows that they are not investing in Pennsylvania. Additionally, some more searching yielded further discrepancies.

NEW RULE: Be a little more skeptical when looking up data from sites like Yahoo! Finance, or anywhere really. If something doesn't make sense, it probably isn't right.  

Let's take a look at NAFAX:

Well the fund's Chief Investment officer sure thinks so. While he is a biased source, he does make some interesting points about Africa as an emerging market with growth potential. We took a look at the Style Box for the fund, and that confused us further. We are not sure how to judge if this is a good investment or not. It is very diversified, however how do we judge the components?

That's a good questions, and that's where we leave it. Next week, we are going to keep on digging. 

Profit!

  

Honeymarket Don't Even Care!

Members present: Brian, Bickford, Danak...set for global domination. 

Sequester? What sequester?

Last week the gang decided that it was important to make sure that our portfolio is staying diverse. We will become a little heavier in Telecom and Energy with the Norway buy. The next step is to seek out something different.

We looked at gold because we don't have any exposure to commodities, but it had a slight drop in 2009 and it was really cheap in 2005. However, it is up up up, and it doesn't seem like the right time to get in on this. Next, we decided to look into Africa in our quest to have a foothold on the entire Risk map.

In this article about some Africa ETFs there is a case made for investing in the continent while avoiding mining and oil. This might be a nice jumping-off point for some potential investments. We'd like to take a look at the makeup of some of the ETFs on the list.

EZA (South Africa index)
NAFAX (Nile Pan-Africa Fund)
WAFMX (Wasatch Frontier Emerging Small Countries Fund)

Next week we should do that

Profit!