This is Novare Investments’ inaugural report on African focused fund managers. The main
purpose of the survey is to map the listed African space as an investment destination to
potential investors, specifically focusing on managers that invest in these markets and the
products they offer.
Africa is relatively under-researched which creates exciting investment opportunities, including
potential investment in often overlooked, well established companies in markets that are (to
date) under-exploited. With the assistance of a professional fund manager in these markets,
exposure to high quality companies can be obtained in an optimal portfolio set-up to maximise
return and minimise risk for the investor.
The focus of the survey is the African continent including North Africa and the funds that
would give you access to these markets. The investment products included are mainly focused
on investment in the listed African space, excluding South Africa. However, many of the
investment products do include a (limited) South African component. Even though South
Africa is not the main focus of this survey, being the continent’s economic powerhouse and
its proximity to other African nations offer investors a gateway into Africa. Although North
Africa is normally classified distinctively as part of the Middle East and North Africa (MENA)
region, we included North Africa in this survey.
Participating funds are typically labelled as either Africa, Frontier Africa, Pan Africa or Sub-
This survey was conducted by means of a voluntary questionnaire completed by managers
that invest in African financial markets, taking a snapshot as at 30 June 2010. The results
are reported on an aggregate basis.
We wish to extend our warmest appreciation to all fund managers who participated in this
Since the start of the century astonishing growth has been observed in Africa’s financial
markets. This growth was driven by several positive factors including improved macroeconomic
fundamentals, increased political stability, high commodity prices and robust domestic demand.
The world only started taking notice of the continent during 2007 as evidenced by the capital
inflows observed during that time. Ironically these inflows were just before the international
financial crisis struck.
Due to the limited exposure of the region’s financial institutions to complex international
financial products engineered by the developed world, Africa was largely unaffected by firstround
effects of the financial crisis. However, these markets did experience massive capital
withdrawals (as also observed in emerging markets) as domestic investors moved their capital
to risk free assets and foreign investors withdrew capital as they were deleveraging and derisking
their investment portfolios.
Since then developed economies have recovered to a certain extent, but during the first half
of 2010 uncertainty and volatility returned as a degree of doubt remained, especially
surrounding sovereign debt and the potential for a double dip recession. These resulted in
muted developed market returns over the first half of the year. For investors looking elsewhere
for yield, frontier markets including African markets can no longer be ignored.
Many investors are unfamiliar with the extent of economic improvement in Africa over recent
years. Even though the continent remains among the world’s poorest regions, it is growing
at a steady pace. From the start of the century African Gross Domestic Product (GDP) growth
has been substantially higher than that of world markets. According to the International
Monetary Fund (IMF) (2008), average growth of 5.0% per year from 2002 was observed in
this region compared to a global average of 4.1%.
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