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Bonds Are a 'Safe' Investment: A Big Lie Gets Even Bigger"African investments will be volatile and they may take years to mature," cautions Jim Powell, editor of Global Changes & Opportunities Report.
Nevertheless, the advisor explains, "I believe the emergence of Africa is an important development that should be represented in your portfolio." Here he looks at two opportunities in the resource-rich region.
"The richest remaining deposits of natural resources on earth are in Africa. And a resource race is starting as America and China are in a quiet struggle in Africa to secure the resources they must have to keep their industrial economies running.
"Many African resources are untapped because most developers have been unwilling to sink billions of dollars into the region's many unstable countries.
"But with natural resource prices soaring, however, Africa's risks are now worth taking. Since 2006, publicly-listed oil companies have tripled their spending in the region.
"And few investors have yet to realize Africa's potential. However, if mainstream investors discover the region, prices could go up very quickly. Either way, I believe Africa will deliver excellent profits for at least a decade, and probably far longer.
"The smartest way to invest in Africa is with a good mutual fund or an ETF. Among the latter I think SPDR S&P Emerging Middle East & Africa (NYSE: GAF) offers the most promise.
"The ETF mirrors the performance of an equity index created by S&P and Citigroup that tracks companies in Egypt, Israel, Jordan, Morocco, Nigeria, and South Africa.
"Although the African ETF should do well,I think you will do better with an investment that adjusts to changing conditions rather than tracking an index. One that fits the bill is the T. Rowe Price Africa & Middle East Fund (TRAMX).
"The fund was launched last September, and is off to a good start. I don't think you should be overly concerned that the fund holds several Middle Eastern stocks in its portfolio.
"They are primarily companies from stable and prosperous areas such as Bahrain, Qatar and Dubai. Overall, the fund is well diversified. I think the risk/reward ratio is in the investor's favor."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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