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January 10, 2000
New Mutual Fund Finds Promise in South Africa
Reinvest In South Africa brings social investing back to its roots in the aftermath of Apartheid.
SocialFunds.com --
In the 80s, socially responsible investment gained a substantial foothold during the movement to
divest in companies doing business with South Africa. Now the same investors that protested against
systematic and often brutal racial discrimination under Apartheid can invest in companies that are
building a new economy there, through the Reinvest in South Africa (RISA) Fund.
 The RISA Fund, launched in October, is an
open-ended mutual fund providing the opportunity to invest in small- and mid-cap companies listed
on the Johannesburg Stock Exchange (JSE). Investors can support the growth of new industries that
reflect the economic empowerment of majority South Africans, while participating in the rising
South African market.
"The RISA portfolio represents the most dynamic business sectors in
South Africa, which is considered to be the most attractive of today's emerging markets," said Sam
Folin, Managing director of Philadelphia-based RISA Investment Advisers LLC. Business is booming in
South Africa, driving the inflation rate in 1998 to a 25-year low which continues to decrease.
The fund was established in conjunction with African Harvest Asset Managers, a financial
services company with offices outside Cape Town, who is sub-adviser to the Fund. Denzil Newman,
chief investment officer and fund manager for African Harvest, is portfolio manager for the fund.
"Having a partner on the ground gives The RISA Fund a distinct competitive advantage," said Folin.
Through research, site visits, and continual monitoring, African Harvest recommends the
companies for RISA investments and maintains a model portfolio with 25 to 35 names from a present
universe of around 250 "New South Africa Companies" on the JSE. In addition to financial criteria,
the companies are reviewed for their records on promoting social equality and economic empowerment
for black South Africans, and serving a diversity of stakeholders, the foundation of the new South
Africa.
"Most of the securities listed on the JSE fall into two categories," Folin
observed. "The importance of the older mining and commodities enterprises is shrinking. The future
is clearly represented in the expanding number of younger businesses that focus on information
technology, consumer products, financial services, tourism, and export manufacturing." Gold
production, once the mainstay, is now only 4 percent of South Africa's Gross Domestic Product.
Some companies typical of the holdings in the RISA Fund include BOE Corporation, one of
the top five banking groups, Profurn, a furniture and household appliance retailer, Carson's
Holdings, manufacturer and wholesaler of ethnic haircare products, and Ceramic Industries, South
Africa's largest manufacturer of ceramic tiles. All of these companies adhere to more progressive
social and labor standards that are the foundation of the new South Africa.
"Besides
excellent business performance, the companies selected for RISA also participate in the New South
Africa Renaissance by meeting a criteria of standards," said Oliver St.C. Franklin, president of
RISA Investment Advisers. "The criteria include encompassing diverse stakeholders, transparent
governance, worker training programs, quality workplace conditions, and the creation of jobs in all
business operations."
The RISA Fund ended its initial three months with a strong record,
returning 18.8 percent in the three months ended December 31, 1999. Powered by a rising South
African market, up 21.5 percent during the same period, the new fund hopes to continue profiting
from South Africa's renewed economic vigor and social standards.
©
SRI World Group, Inc. All Rights Reserved.
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