As a broadening debt crisis draws the financial community’s attention to the euro zone, money manager Larry Seruma has quietly been looking toward an entirely different corner of the global economy. With little fanfare, Seruma’s firm, Nile Capital Management, has launched the first-ever actively managed, U.S.-based mutual fund to focus exclusively on Africa. The fund will invest in African stock markets and in companies that, while based in other continents, get a significant portion of their revenues from Africa.
Even in today’s global marketplace, in which references to PIGs (Portugal, Italy, and Greece) and BRICs (Brazil, Russia, India, and China) are commonplace, Africa has traditionally flown decidedly under investors’ radars. Still, a broad range of African companies are surging in value even as stock markets stall in the countries that have traditionally anchored the international portions of American investors’ portfolios. The Ugandan, Kenyan, and Nigerian stock markets, for instance, all returned upwards of 20 percent in the first quarter of 2010, according to Seruma.
This growth, of course, comes with a long list of risks, not the least of which is that African stock markets are notoriously difficult to navigate. That’s where Seruma’s Pan Africa Fund hopes to fit into the equation, bringing active management to a part of the globe that mainstream investors don’t understand particularly well.
For now, though, this specialty management will come with a hefty price tag: The fund’s A shares will have an expense ratio of 2.7 percent.