Many investors would like to invest in African stocks, and not are not only concerned about what to invest in (which is where the African Investment Report comes in), but also about the risks involved.
You shouldn’t allocate 100% of your portfolio to African stocks, but how much? Many used to recommend somewhere around 2% of your portfolio to emerging markets and/or frontier markets. Now there is an article in a recent Barron’s that recommends at least 20% to “emerging markets”, plus-or-minus, depending on your risk profile.
When emerging markets are mentioned, there are different definitions, one of which is the BRICS countries, which include South Africa. This is interesting, because many companies based in South Africa are expanding into the rest of Africa, particularly sub-Saharan Africa. Other companies might be headquartered in the frontier market countries, such as Nigeria, Ghana, or Kenya. There may be some good buys with stocks of companies in those countries as well.
And this 20% doesn’t have to be in all Africa-focused companies. Although Africa is the economically fastest-growing continent in the world, there are other great buys outside of the U.S. in Europe, Latin America and Asia.
As the article points out, an important point here is diversification. Get ready for the coming years; not just the coming year. And stick with the Africa Investment Report, so that we can keep you current on what’s going on in Africa.