Exchange Traded Fund the Go-to Asset Class at Nairobi Securities Exchange

Exchange Traded Fund
  • Absa Kenya NewGold ETF is the only ETF listed at the Kenyan bourse. 

Gold exchange-traded funds at the Nairobi bourse witnessed an all-time high net inflow on Monday amid the coronavirus outbreak leading investors to opt for the instrument as a safe haven. 

The Nairobi Securities Exchange’s (NSE) data, the New Gold ETF achieved an all-time high turnover of Ksh66 million on Monday 30 March. 

The overall turnover in the day was Ksh 804 million with the Gold ETF contributing 8.15%.

It contributed to this by 8.15% – the highest since its listing.

Mr. Geoffrey Odundo, the Chief Executive of NSE said it was encouraging to see positive market trends despite the unfortunate circumstances markets have found themselves in.

“This is the highest activity seen on the ETF based on the turnover recorded since its listing at the NSE. Investing in ETFs is affordable and easier for the first time, retail and institutional investors to access a wider range of investment options previously only available to select investors.”

Gold-backed ETFs are passive investment instruments that are based on price movements and investments in physical gold.

The NewGold issuer (RF) Ltd, a subsidiary of South Africa’s ABSA, became the first ETF issued in East Africa in 2017.

Kenya became the 7th market within the Absa Africa Group to launch the product. It was valued at approximately USD 1.4Billion is the largest Gold ETF in Africa and the 7th largest in the world.

NewGold is an Exchange Traded Fund listed on the JSE which enables investors to invest in a Gold Bullion debenture, the value of which tracks the price of gold. 

The NewGold ETF derives its name from NewGold Issuer (RF) Limited –an entity that was launched by Absa Capital and managed by NewGold Manager (Pty) Ltd. 

The NewGold ETF was first listed in South Africa in 2004 as the 3rd gold ETF in the world. The first gold ETF was launched in the US in 2003. NewGold ETF has since been successfully launched in Botswana (2010), Nigeria (2011), Ghana (2012), Mauritius (2013) and Namibia (2014).