Even though they performed better than reference index funds (MSCI Emerging & Frontier Market ex SA, S&P Pan-African ex SA), funds investing in African stock exchanges excluding the Johannesburg Stock Exchange are having a difficult year.

At the period which ended October 2018, the most performing of those funds Allan Gray Africa ex South Africa Fund had a negative performance of -2.1%. In other words, investors who invested their funds or savings in those funds sustained losses.

In a re-actualised briefing note, Allan Gray Africa explained that this performance was due to the situation in the main financial markets (Nigeria, Egypt, and Kenya) which as the top five of the places where those investments (40% in Nigeria) are realized sustained losses during Q3, 2018.

Allan Gray also informed that on Lagos stock exchange, the shares of banks have lost value. Despite a good cumulated result in H1, 2018, those banks are facing a new regulation which could wear away final margins. To this, we should add the natural pressure in emerging and frontier markets characterised by net divestment of foreign assets in favor of more mature markets.

All the other funds coming after Allan Gray did not perform better. With some exceptions, they experienced the same challenges but over the past three years, they have been profitable.

For long-term investors, Allan Gray provided a cumulated return of 47% since its launch in 2012.

Idriss Linge