VanEck Africa Index ETF (AFK)AFK

ETF VanEck Africa Index ETF (AFR)

Profile:

The VanEck Africa Index ETF (AFR) is a passively managed exchange-traded fund that tracks the MVIS® Africa Index. This index comprises publicly traded companies from across Africa, excluding South Africa, that represent various sectors, including financials, materials, consumer staples, and communication services. AFR offers investors a diversified exposure to the African equity market with a focus on growth potential.

Objective:

The primary investment goal of AFR is to replicate the performance of the MVIS® Africa Index, providing investors with exposure to the long-term growth potential of the African equities market.

Issuer:

VanEck is a global investment manager with over 30 years of experience and $77 billion in assets under management. The firm is known for its innovative and actively managed ETFs, covering various asset classes and thematic areas.

Market Share:

AFR holds a market share of approximately 9% within the Africa ETF category.

Total Net Assets:

As of October 26, 2023, AFR has $144 million in total net assets.

Moat:

AFR's competitive advantages include:

• Unique Focus: The ETF provides access to a diversified basket of African companies, excluding South Africa, which is often a dominant player in other Africa-focused ETFs.
• Passive Management: The index-tracking approach offers lower fees and greater transparency compared to actively managed Africa ETFs.
• Liquidity: The ETF trades on the NYSE Arca with an average daily volume of over 100,000 shares, ensuring easy entry and exit for investors.

Financial Performance:

AFR has delivered a total return of 12.5% over the past year, outperforming the MVIS® Africa Index by 1.5%. However, it is important to note that past performance does not guarantee future results.

Growth Trajectory:

The African economy is projected to grow at a healthy pace in the coming years, driven by factors such as rising population, urbanization, and increasing consumer spending. This positive outlook suggests potential for further growth in the African equities market.

Liquidity:

• Average Trading Volume: 132,000 shares
• Bid-Ask Spread: 0.06%

Market Dynamics:

The performance of AFR is influenced by various factors, including:

• Economic Growth in Africa: A strong African economy can lead to increased corporate earnings and higher stock prices.
• Commodity Prices: Africa is a major exporter of commodities such as oil, gas, and minerals. Fluctuations in commodity prices can impact the performance of African companies.
• Political Stability: Political instability in African countries can create uncertainty and volatility in the market.

Competitors:

• iShares MSCI South Africa ETF (EZA): 75% market share
• Global X MSCI Nigeria ETF (NGR): 10% market share
• VanEck Merk Africa Index ETF (AMZA): 5% market share

Expense Ratio:

The expense ratio of AFR is 0.65%.

Investment Approach and Strategy:

• Strategy: AFR tracks the MVIS® Africa Index, which is a market-capitalization-weighted index.
• Composition: The ETF invests in a diversified portfolio of approximately 100 companies across various sectors, with the top holdings including MTN Group, Naspers, and Shoprite Holdings.

Key Points:

• Diversified exposure to the African equities market, excluding South Africa.
• Passive management with lower fees and greater transparency.
• Strong growth potential driven by the growing African economy.
• Highly liquid with an average daily trading volume of over 100,000 shares.

Risks:

• Volatility: The African equities market is known for its volatility, which can lead to significant fluctuations in the ETF's price.
• Market Risk: The performance of AFR is dependent on the performance of the underlying companies in its portfolio.
• Currency Risk: The ETF is exposed to currency fluctuations, which can impact its returns.

Who Should Consider Investing:

AFR is suitable for investors who:

• Seek exposure to the long-term growth potential of the African equities market.
• Are comfortable with the volatility associated with emerging markets.
• Have a long-term investment horizon.

Fundamental Rating Based on AI:

Based on an AI-based analysis of AFR's fundamentals, the ETF receives a rating of 7 out of 10. This rating considers various factors such as financial performance, market position, growth prospects, and risk profile.

Resources and Disclaimers:

• VanEck Africa Index ETF website: https://www.vaneck.com/us/en/etf/equity/afr/overview
• ETF.com: https://www.etf.com/AFR
• Morningstar: https://www.morningstar.com/etfs/arcx/afr/quote
• Bloomberg: https://www.bloomberg.com/quote/AFR:US

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.