Invest In South Africa

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One way to invest in South Africa is through mutual funds. There are now quite a few mutual funds that focus on South Africa. Some of them are quite good, and I would refer you to Morningstar.com to find these.

These funds however are often quite expensive to own with internal expenses of 1%-2%. Not to mention the “load” or commission you will pay your broker. This can be upwards of 5% depending on the amount invested in such funds.  I personally like to hold onto my money and so am not a big fan of mutual funds generally South African or not.

A better alternative is to invest in companies that are based in South Africa. There are hundred of companies to invest in but it must be said that South African miners are the most interesting. South Africa is blessed with resources that the rest of the world lust for. It’s good to have a business that deals in such commodities.

Of course the problem with individual stocks is that they are subject to the same risks as any other stocks. Management can run the company into the ground. The business model can become antiquated. The regulatory environment can change. What can be a gold mine one day (quite literally in S.A) can become a money pit the next.

The best way for most folks to invest in South Africa in my opinion is to invest in ETFs, or exchange traded funds, that follow the South African stock market. My personal favorite is the Ishares MCSI South Africa ETF,  EZA.

One can make a very macro bet on South Africa with such a vehicle without involving oneself in the minutia of stock statistics or incurring the costs of mutual funds.

ETFs are very low in cost. Typically the internal fees of exchange traded funds are near zero. Also one need not worry about paying a broker a large load. The only commission you will pay your broker is the relatively small one you incur when you buy or sell. If you do business with a discount broker the cost of such moves is also close to nothing.

South Africa is a land of contrasts, rich poor, black and white. But savvy investors will have a toe in South Africa.

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