A community member asked us this week whether was any way for retail investors to directly invest in the African bond market
The short answer is “no” but there is perhaps a more nuanced answer which could be considered.
South African bond market:
If you were looking for exposure to the South African bond market, you could look at the Ashburton Inflation-X Exchange Traded Fund which invests in diversified portfolio of government-linked bonds. Since inception, the ETF has delivered 7.65% annually.
Alternative for Africa
Emerging markets such as Africa offer high-yielding debt to investors as they are perceived to be more risky than – for example – the United States. For this extra risk, emerging markets typically pay investors a higher yield.
Examples of this greater “risk” would be the situation in Argentina right now or Turkey.
There are Exchange Traded Funds (ETF) which allow you to access a basket of Emerging Market bond markets that may be of interest to retail investors.
One example of this could be the iShares JP Morgan USD Emerging Market Bond ETF. Launched in 2007, this ETF offers exposure to emerging market debt in US dollars. It is low cost and extremely liquid and offers exposure to a number of African countries including South Africa, Egypt, Kenya and Nigeria.
The graph below shows the capital performance over 5 years:
At the moment, it offers a 4.5% dividend yield.
South African investors seeking international exposure can invest in this fund through the SAXO platform. You can open a SAXO account in South Africa from $1000. If you require further information about this, you can mail firstname.lastname@example.org complete the form below.