A smart way to play this optimism rather than guessing which one company might benefit the most is to turn to the ETF realm. Buying a basket of African stocks would spread out your risk and presumably give you a better chance at success. The Market Vectors Africa Index ETF is one such basket ETF that I recently trumpeted as an intriguing option over the long run. It’s actually heavily weighted to the financial sector (about 37% of its holdings), but it’s diversified enough that the fund holds 109 separate companies and pays out a 3.5% yield!
Source: White House, commons.wikimedia.org.
Don’t forget about domestic markets
Although the U.S. isn’t among the most optimistic countries in the world as named by Gallup, it’s hard to negate the idea that optimistic investors can’t push the markets even higher. Optimism can drive citizens to invest, and that, in turn, can push an already extended market even higher.
For the Dow Jones Industrial Average and broader-based S&P 500 the reality of solid economic data is already there. July’s National Association of Home Builders/Wells Fargo & Co (NYSE:WFC) Housing Market Index came in at a reading of 57, the highest reading since Jan. 2006. Consumer delinquencies on credit cards are also either at or near historic lows for all the big credit service lenders. In sum, the housing market is on solid footing, and for money center banks it’s back to business as usual.
Furthermore, the unemployment rate, while not exactly plummeting, has been on a steady downslope, as optimism has spread to enterprises that have added to their payrolls accordingly.
Another aspect you might consider is that even with Africa being the most optimistic region, nearly all of the Dow’s 30 components understands this, and a good portion of the S&P 500’s have plans to expand to Africa, or have already opened up shop there.
U.S. businesses are certainly going where the growth is, and it appears you can take advantage of that by investing in individual companies with African continent exposure, picking up some African ETFs, or, if you’re really risk-averse, banking on the U.S. markets in which many of the largest companies by market value already have exposure to growth in Africa.
The article These Are the World’s 10 Most Optimistic Countries originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, MasterCard and Wells Fargo. It also recommends Chevron.
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