Africa: In the investment universe, it’s the final frontier — a rapidly developing, still mostly inaccessible region that has oodles of untapped potential and plenty of thistles guarding it.

On one hand, Africa in many ways looks like a growth powder keg just looking to explode. Charles Sizemore, founder of Sizemore Capital Management, a fee-based registered investment advisory firm based in Dallas, calls Africa “the last real investment frontier” because of its per capita GDP growth.

On the other hand, you have a region that faces enormous security challenges, political instability, commodity risk and, as a whole, not as bright an economic growth outlook as analysts had predicted in years past — at least if the cookie crumbles the wrong way.

Africa’s the very definition of high risk, high reward. And while you can mitigate your risk a little bit by buying Africa via diverse exchange-traded funds, investing in the space still is its own adventure.

Buying Africa directly. There are two ways to invest in Africa: more directly via Africa-specific funds and a little more indirectly via broader funds that invest in African countries along with other nations. As far as direct investments go, there’s merely a handful:

— Market Vectors Africa Index ETF (ticker: AFK): The AFK ETF holds 101 companies that are domiciled in and/or do heavy business in Africa (so some holdings are located in Canada, Switzerland and even the U.S.). It charges 0.8 percent in expenses, or $80 annually for every $10,000 invested.

— iShares MSCI South Africa ETF (EZA): The EZA ETF invests in 56 companies in this “BRICS” emerging-market country. It’s heavy in consumer discretionary (33.5 percent) and financials (31 percent), and has an expense ratio is 0.62 percent.

— Market Vectors Egypt Index ETF (EGPT): The EGPT ETF holds a mere 28 companies in (or dealing with) this somewhat volatile part of the world. It’s extremely financial-heavy at just more than half the fund and charges 0.97 percent.

— Global X MSCI Nigeria Index ETF (NGE): Invests in 20 companies in Africa’s largest country by population and GDP. The NGE ETF is heavy in financials (46 percent) and consumer staples (31 percent). Charges 0.68 percent after fee waivers.

The Market Vectors Africa Index Fund is the most diversified offering of the four, and in fact, its three largest country weightings go to South Africa, Egypt and Nigeria. Still, it is a fairly lopsided fund in that those three nations account for roughly half the fund’s weight, Morocco and Kenya are the only two other African countries that have any significant representation and half of AFK is invested in financials.

Things get even more dicey when you start to look at the single-country offerings.

Kevin Carter, founder of the Emerging Markets Internet & Ecommerce ETF (EMQQ), for instance, points out how the EZA isn’t exactly as South African as you might think. For instance, top holding Naspers, which makes up 21 percent of EMQQ’s holdings, benefits from major interest in Chinese Internet titan Tencent (TCEHY), Indian e-commerce player Flipkart and Nigerian online mall Konga.com.

There’s also telecom MTN Group (MTNOY), which operates in South Africa, but also a host of other developing markets. And there’s Steinhoff International Holdings, which is South African, but which gets the majority of its revenues from Europe.

“So that’s one of the problems with the index,” Carter says. “The first 20 percent is China and other pieces of investments around the world. The second 10 percent is definitely South African revenue but also 20 other markets. And the fourth-biggest holding is selling furniture to Western Europeans.”

The Nigeria ETF offers its own set of problems.

Jay Jacobs, vice president of research at Global X Investments, points out the tremendous opportunity in Nigeria, including IMF predictions of 4 percent growth next year.

“(Nigeria offers) what you want to see in a frontier market, which is growing middle class, growing consumption, a country that is increasingly less dependent on something like oil exports and more so in internally generated commerce,” he says.

The downside? “The fund itself is about 45 percent in financials and about a third in consumer staples. So there is that sector concentration risk.” And, “With any frontier market, people should be cognizant of the political situation, as well as anything to do with interest rates and currencies.”

Buying Africa indirectly. A few funds that focus on so-called “frontier markets” — markets that are even less developed than emerging markets, but that theoretically hold much more growth potential — are among some of the other ways to get African exposure:

— Guggenheim Frontier Markets ETF (FRN): Has roughly 35 percent exposure to Africa via Nigeria, Kenya and Oman. It charges 0.7 percent in fees after waivers.

— iShares MSCI Frontier 100 Index Fund (FM): Has roughly 20 percent exposure to Africa via the same three countries and charges 0.79 percent.

— Global X Next Emerging & Frontier ETF (EMFM): Has roughly 5 percent exposure to Africa across 10 countries and charges 0.58 percent.

The problem with investing in these funds to ride African growth to profits is that you’re not just investing in Africa, but also South America, the Middle East and other regions. In all three cases, Africa doesn’t even represent a majority of the fund’s weight. The funds aren’t terribly diverse geographically, either, providing exposure to just a handful of countries.

And, as Jacobs points out, there’s a glaring concern when you invest in frontier markets. “The frontier markets are heavy in commodity exposure and financials just based off what the economies are geared around,” he says.

Still, Jacobs says that the juice might be worth the squeeze: “As you look for growth, it’s sort of an old adage in finance that risk and reward go hand in hand. If you’re looking for more growth opportunity, you’re going to have to accept more risk as well.”

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How to Invest in Africa originally appeared on usnews.com