NeMa: African funds going global
25 November 2015 London
Image: Shutterstock
Once considered a specialist investment destination, Africa is gradually carving out its place on the global fund management scene, according to Paul Forsyth, a managing partner at Apache Partners.
Speaking at NeMa Africa in London, Forsyth pointed to a trend of African investment funds looking to UCITS vehicles in Luxembourg and Dublin and which do not typically appeal to retail investors. This suggests a belief that Africa will be next on the agenda for retail clients, said Forsyth.
Of those regions considered to be on the frontier index, Africa holds 33 percent of the total assets, compared to just 7 percent in 2013. Forsyth partly attributed this to the fact that the Middle East has since moved out of the frontier index. He also pointed out that non-South Africa domiciled funds are now accessible to international investors.
He also stressed that “the market is young”, comparing it to the Asian market in the 1980s, and saying: “We’re very much in the same position as Asia was 25 years ago.”
Despite this, he accepted that the majority of African business is still in South Africa, which holds about half of all the continent’s funds. “Cape Town and Johannesburg are the key areas,” he said.
Finally, he cited the growth of smaller and more specialised fund managers, particularly those with a knowledge of their particular market. It is important to get a feel for how a manager might react to specific market events, whether they’re comfortable with the currency, and whether they’re driven by asset allocation, he said.
While there are large international players with a presence in Africa, for them, smaller returns are less meaningful, and mistakes can be much more damaging. Forsyth said: “Larger funds have less flexibility to play in the small markets.”
Speaking at NeMa Africa in London, Forsyth pointed to a trend of African investment funds looking to UCITS vehicles in Luxembourg and Dublin and which do not typically appeal to retail investors. This suggests a belief that Africa will be next on the agenda for retail clients, said Forsyth.
Of those regions considered to be on the frontier index, Africa holds 33 percent of the total assets, compared to just 7 percent in 2013. Forsyth partly attributed this to the fact that the Middle East has since moved out of the frontier index. He also pointed out that non-South Africa domiciled funds are now accessible to international investors.
He also stressed that “the market is young”, comparing it to the Asian market in the 1980s, and saying: “We’re very much in the same position as Asia was 25 years ago.”
Despite this, he accepted that the majority of African business is still in South Africa, which holds about half of all the continent’s funds. “Cape Town and Johannesburg are the key areas,” he said.
Finally, he cited the growth of smaller and more specialised fund managers, particularly those with a knowledge of their particular market. It is important to get a feel for how a manager might react to specific market events, whether they’re comfortable with the currency, and whether they’re driven by asset allocation, he said.
While there are large international players with a presence in Africa, for them, smaller returns are less meaningful, and mistakes can be much more damaging. Forsyth said: “Larger funds have less flexibility to play in the small markets.”
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