ETF Plays For Barron's Bullish View On Africa

This weekend's Barron's cover story touted Africa as the "final frontier," a market where investors and Western companies alike could live to regret maintaining their old stereotypes regarding the continent. Things have changed to a degree in Africa. As Barron's notes, Africa is one of the fastest growing regions in the world, not afflicted with large national debts, failing banks and spates of corporate bankruptcies. In other words, it can be argued that Africa is more financially well-behaved than the U.S. or Europe. Africa does have some issues to contend with. Many of the countries there are heavily addicted to resources, namely oil, as a means of driving their economies. Oil will always attract foreign investors, but that is double-edged sword. Western oil giants like Italy's Eni (NYSE:

), France's Total (NYSE:

) and Exxon Mobil (NYSE:

) have signaled interest in expanding in Africa and Apache (NYSE:

) recently bolstered its presence in Egypt by acquiring some assets from BP (NYSE:

). On the other hand, Royal Dutch Shell (NYSE: RDS-A) has had just about enough of problems caused by militant rebels in Nigeria and has said these issues give the company pause about further investment in the country. Excluding South Africa, which is classified as an emerging market, the rest of Africa has frontier status and that means ETFs are the best way for investors to dip their toes into Africa. For some reason, Barron's mentions nearly 20 securities for investors to consider to get exposure to Africa including four mutual funds (a waste of time when you can have an ETF) and four pink sheets stocks (investing in Africa is risky enough, you'd only be compounding it with pink sheets fare.) Let's have a look at some ETF's that can help you get involved in Africa investing. The PowerShares MENA Frontier Countries ETF (Nasdaq:

) will get you into Egypt and Morocco to the tune of almost 35% of the ETF's weight. PMNA is not a pure play on Africa as it also holds stakes in Kuwait and the United Arab Emirates, among other Middle East nations. Oddly enough, PMNA offers only scant exposure to energy stocks. Financials account for more than 57% of the ETF's weight. The expense ratio is 0.95%. If you want to take a pass on 100% exposure to South Africa that the iShares MSCI South Africa Index Fund (NYSE:

) offers, but still want some exposure to this market, checkout the Market Vectors Africa ETF (NYSE:

). AFK is more than 28% weighted to South Africa, but this ETF will also give you exposure to Nigeria (18.5% weight) and Egypt (19.1% weight) among others. AFX focues almost entirely on medium- and small-caps and is also heavy on financials (29% weight). Resources names account for 20% and AFK offers better volume and a lower expense ratio, 0.88%, than PMNA. One more option is the Market Vectors Egypt Index ETF (NYSE:

), which made its debut in February. The ETF Professor profiled EGPT earlier this year, noting there was a lot to like in Egypt. The country has slashed inflation and its economy is far more diverse than many others in the Middle East. As such energy stocks account for just 3% of EGPT. Financials account for almost 47% of the ETF's sector allocation. Telecom and materials issues account for more than 16% each. EGPT hasn't attracted a lot of assets (just $3.5 million AUM) and the expense ratio is a tad high at 0.94%, so consider this one "one to watch" rather than an immediate portfolio addition. Bottom line: Stick with AFK for now, but keep an eye on EGPT's ability to attract new inflows as more investors take note of Egypt's growth story.