Calvert Group, a Bethesda-based mutual funds group that made its name by assiduously not investing in South Africa, tomorrow will launch a mutual fund to invest in companies in that nation as well as the rest of the continent.
"Africa may be the last and largest untapped emerging market out there," said Steve Schueth, senior vice president of the $4.65 billion mutual funds group. "And we think that means there's a lot of financial potential."
Tomorrow, at press conferences in New York and Washington, the Calvert Group is scheduled to launch its New Africa fund, a joint venture with Sloan Financial Group, an asset management firm based in Durham, N.C. The fund will be managed by New Africa Advisers, a Sloan subsidiary in Johannesburg, South Africa.
The Calvert Group, known for its "socially responsible" investment policies, was a supporter of the divestment movement of the 1980s that encouraged institutional investors to pull money from South African companies to protest apartheid.
But with that system now in ruins and Nelson Mandela elected as president, the Calvert Group wants to see money flow back to Africa.
"We want to help provide capital to people who generally don't have access to it and who can use it to rebuild their economy, their infrastructure," Mr. Schueth said.
The fund hopes to raise between $50 million and $100 million by the end of the year, with most of the money initially going to South African companies, Mr. Schueth said. The minimum investment is $2,000.
Some closed-end mutual funds, offering a limited number of shares and restricted redemption, have invested in Africa, he said. But Calvert's fund is open-ended, meaning it will expand to meet demand and allow investors to have easier access to their shares. There will be a 2 percent redemption fee during the first two years.
About 90 percent of the fund will be invested in publicly traded shares on the Johannesburg stock exchange and the continent's 13 other exchanges. The remaining 10 percent will be available for direct investment in various companies, Mr. Schueth said.
The fund should appeal to black Americans, to others with connections to Africa and to "socially responsible" investors, he said.
It also will appeal to those "who live on the edge," he said. With many African countries in a constant state of flux, this is not an investment for the faint of heart, and Mr. Schueth said even experienced investors should not sink more than 10 percent to 15 percent of their portfolio in the new fund.
"This is very definitely a fund for investors that can handle a fair amount of risk," he said.