Invading Africa

As a result, Africa faces its biggest invasion since Cecil Rhodes. But the state-owned enterprises, venture capitalists and philanthropy funds heading its way come closer to investing than plundering. Foreign direct investment into Africa, which was just $15bn in 2002, peaked at approaching $60bn in 2008 and remains well above $40bn a year. In Africa's terms, that's a lot of capital spending, most of which has yet to generate its optimum returns. That's another way of saying that - combined with the effect of trade with Asia (mostly China), which runs at around $200bn a year - Africa's growth in the coming years should be brisk or better.

Let's not get carried away. Because most of Africa will remain depressingly poor by the rich world's standards - not even half of its countries have average annual income per head of $1,000 a year - then its sobriquet as 'the last investment frontier' borders on the flippant. Even so, its prospects mean that the absence of specific exposure to Africa in the Bearbull Global Fund is an issue.

Basically, there are four ways to play the 'into Africa' theme:

■ Shares in multinationals with a big Africa exposure

■ London-quoted Africa specialist companies

■ Africa-specialist investment funds (both closed-end and open-end funds)

■ Exchange traded funds

Each approach has advantages and disadvantages. Put together a mini-portfolio comprising shares in, say, AngloAmerican (AAL), Old Mutual (OML), SABMiller (SAB), PZ Cussons (PZC) and Royal Dutch Shell (RDSA) and you have lots of exposure to sub-Saharan Africa, albeit with a geographical bias towards South Africa and Nigeria (by a margin, the continent's two biggest economies anyway) and a product bias towards minerals and oil plus financials and staple consumer goods (though those activities - plus agriculture - are the big drivers of growth). However, the real issue is that these five - hugely influential though they are in Africa - make most of their money elsewhere. So the Africa exposure they offer is either sensibly hedged or horribly diluted, depending on your view.

The solution may be to think small and go for 'option 2', the London-quoted Africa specialists. Buy shares in Investors Chronicle favourite Zambeef (ZAM) and you have exposure to a fast-growing company that serves the newly emerging middle class of Zambia (where it makes most of its money) and Nigeria (where it is making a foothold). Add in, say, shares in Afren (AFR), whose oil production off the coast of Nigeria is surging, Fastjet (FJET), which is introducing the low cost air travel formula to Africa, and Equatorial Palm Oil (PAL), which is bringing palm oil production to Liberia, and you have a focus on Africa that multinationals can't offer. For some, that focus may be too narrow; nor does it help that shares in Zambeef, Fastjet and Equatorial Palm Oil are traded on the Alternative Investment Market so, for a while at any rate, aren't eligible for Isa funds.

If that's an important factor then the Africa-focused closed-end funds won't be much use either. The three investment companies shown in the table are all Aim-quoted. The question, therefore, becomes: does the advantage of appointing a specialist investment manager to do the stockpicking outweigh the shortcoming of being outside a tax-free Isa wrapper? That's subjective, although Africa Opportunities Fund (AOF) looks nicely diversified across the sub-Saharan region, with big weightings in Nigeria (19 per cent), Ghana, Zambia and Senegal (all 18 per cent), but just 4 per cent in South Africa. By contrast, Blackstar (BLCK) focuses on a few medium-sized South African companies, such as Times Media Group and Litha Healthcare, both of which are Johannesburg-listed, and Global Roofing Solutions, a private company. And Jersey-based Masawara (MASA) puts its capital into five companies operating in Zimbabwe, where poverty is the norm but potential - if it ever got good governance - would be high.

These funds aren't everyone's cup of tea, which is why the option of choosing an exchange traded fund might be preferred. However, the choice is limited. Buy shares in iShares MSCI South Africa (SRSA) and, effortlessly, an investor gets an Isa-eligible fund that tracks an index of shares in major South African companies that might be a good proxy for the 'Africa' experience. The MSCI South Africa index is light on resources stocks with a focus on financials and consumer spending, which is where the real action will eventually be concentrated. Besides, the Bearbull global portfolio is about keeping investing ultra simple; and sorting out Africa with just one holding is certainly that.