Finweek English Edition - - COMPANIES & INVESTMENTS -

Global in­vestors have been fall­ing over them­selves in re­cent years to gain ex­po­sure to the p h e n o mena l e c o n o mic growth re­nais­sance tak­ing place across much of Africa, re­sult­ing in a mul­ti­tude of eq­uity funds fo­cused on the con­ti­nent’s most dy­namic economies spring­ing up in the last few years.

Un­for­tu­nately the ma­jor­ity of th­ese Africa eq­uity funds are aimed squarely at large in­sti­tu­tions rather than the typ­i­cal re­tail in­vestor. The ma­jor­ity of Africa funds also have a very high min­i­mum in­vest­ment ef­fec­tively pre­clud­ing any­one that isn’t a high net worth in­di­vid­ual from tak­ing a po­si­tion. How­ever, there are at least two Africa eq­uity fund of­fer­ings that al­low re­tail in­vestors in South Africa to gain ex­po­sure to the con­ti­nent’s eco­nomic trans­for­ma­tion: the Mo­men­tum Africa Eq­uity Fund and the Pre­scient Africa Eq­uity Fund.

“An Africa eq­uity fund is a great way to di­ver­sify your port­fo­lio be­cause a lot of the African coun­tries that make up the funds are far less cor­re­lated to South African growth than peo­ple re­alise,” says Jo­han Steyn, a co-port­fo­lio man­ager of the Pre­scient Africa Eq­uity Fund, which cur­rently has about R116.5m in as­sets un­der man­age­ment. “It al­lows you to buy into the African growth story, which still has a lot of room to run be­cause most of the GDP growth in Africa is coming off of a very low base.”

In­vestors can ac­cess the Pre­scient Africa Eq­uity fund via two op­tions: a once-off min­i­mum lump sum of R10 000, which can then be left to com­pound over time or al­ter­na­tively a R500 monthly debit or­der. It’s also pos­si­ble to make a lump sum in­vest­ment as well as a monthly in­vest­ment.

The only down­side to in­vest­ing in the fund is cost. Pre­scient charges an ini­tial fee of 1.14% each time you in­vest (ie 1.14% of ei­ther your lump sum or each of your monthly de­posits) as well as an an­nual man­age­ment fee of 1.31%. In ad­di­tion, there is a 1% exit fee should an in­vestor choose to cash in although Steyn points out that there is no per­for­mance fee.

“African ex­changes of­ten have higher trad­ing costs and the for­eign ex­change charges can also add up,” says Steyn. “The fees that peo­ple pay are in­vested back into the fund to cover th­ese costs.”

Pre­scient’s Africa Eq­uity Fund cur-

Mo­men­tum Africa Eq­uity Fund

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