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The Commonwealth Africa Fund: Consistently Negative Returns

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Nov. 10 2015, Published 11:15 a.m. ET

Commonwealth Africa Fund

In this article, we’ll be looking at the Commonwealth Africa Fund (CAFRX), which invests in African countries’ financial markets. As of June 30, 2015, the fund had a major exposure in South Africa. It had an allocation of 80.3% in South Africa, 5.9% in Nigeria, and 3.7% in Egypt.

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CAFRX’s portfolio

As you can see in the above graph, CAFRX invests in diverse sectors. According to the latest complete portfolio information as of June 30, 2015, the financial sector was CAFRX’s largest holding with a 38.2% exposure. CAFRX has no exposure to healthcare, utilities, or information technology.

As of September 30, 2015, CAFRX’s portfolio had a total of 48 securities. The top individual holding of CAFRX is the VanEck Vectors Africa ETF (AFK), with 9.7% of the portfolio. Its top ten holdings form 56.8% of the portfolio. The fund’s portfolio include stocks such as Sasol (SSL), AngloGold Ashanti (AU), and Gold Fields (GFI).

Fund performance

The above graph shows annualized returns for CAFRX as of November 6, 2015. The returns are negative for all the periods. In the last one year, the fund has given a return of -15.3%. The last quarter’s return was -7.6%. Since its inception in November 2011, CAFRX has had a return of -4.3%, remaining almost flat. The fund reached an all-time high in May 2014. Given the poor returns, investors are unwilling to invest in the risks of Africa.

In the next part, we’ll look at another Africa-focused fund, the Nile Pan Africa Class A ETF (NAFAX).

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