This fund takes a thematic approach to companies across Africa. It will invest in equities and bonds issued by companies based in Africa or those based elsewhere whose main activity is trading with African economies. The fund can also invest in securities issued by African governments.
Fund manager Anthony Eaton will explore the themes of globalization and the emergence of the African consumer in this specialist African portfolio. He has invested in emerging markets, including Africa, for the past six years while running the JM Finn Global Opportunities fund. He joined JM Finn in 2001 and previously worked at Greig Middleton.
Eaton believes Africa will benefit from globalisation because it is a major supplier of raw materials and commodities to the rest of the world. He will also invest in firms that supply consumer goods and services to African countries with big populations and higher incomes, such as Nigeria, Egypt, Kenya and South Africa. The majority of the portfolio will comprise bigger companies, but there will also be some exposure to less liquid medium sized and smaller companies.
Eaton will initially invest in the same African companies he holds in his global opportunities fund, but will add more stocks to improve diversity. Around 70 per cent of the portfolio will go in to companies based outside Africa, but Eaton is able to invest up to 60 per cent of the fund in equities on local African markets excluding South Africa. The maximum weighting for South Africa is 50 per cent.
JM Finn says that its global fund invests 30 per cent in Africa and believes the region has developed sufficiently to attract investors in to a dedicated fund. The region may have strong long-term growth potential but problems such as political instability and corruption make it high risk.