Two Is Enough: ETFs For Nigeria's Elections

For investors with a global view and for political junkies, these are interesting times. As we noted last week, primary elections in Peru are having an impact on the iShares MSCI Peru All Capped Index Fund EPU that cannot be ignored. Of course, the situation in the Middle East and North Africa (MENA), namely Libya, has controlled the headlines for weeks now, but move further south down the rugged, resource-rich continent, and you're apt to find another potential political hot-spot. That's Nigeria we're talking about. Look at elections in Nigeria this way: If the goings on in Egypt and Libya could spark fear into the oil market and weigh on some emerging markets ETFs, what's going to happen if these elections in Nigeria, one of the most corrupt countries on earth, don't go smoothly? Consider the facts: Nigeria is far and away Africa's largest country by population. It also produces a lot more oil than Libya. In fact, Nigeria vies with Angola for the top spot among Africa's oil-producing countries. Making matters worse is the fact that Nigeria is a major supplier of crude to the U.S. The fourth-largest supplier in January, accoridng to the U.S. Energy Information Administration. Even with those important statistics, Nigeria doesn't get a lot of representation in the ETF world. These are the two funds to keep an eye on as Nigeria's political wheel turns. 1) Market Vectors Africa Index ETF AFK: Not surprisingly, AFK has had a wild year, but the ETF has bounced nicely in recent weeks. Maybe it's a good thing that oil stocks account for just over 10% of the ETF's weight, but Nigeria accounts for nearly 16.5% of the fund's country allocation, making this the best way to play Nigeria under any circumstances. 2) Guggenheim Frontier Markets ETF FRN: Nigeria is the epitome of a frontier market and it certainly belongs in an ETF that tracks those rugged markets. Nigeria only gets a 2.84% weight here, so it is an option if you want just slight exposure to the country, but AFK is still the preferred election play.