Exchange Traded Funds (ETF) in Kenya is a listed investment product that tracts the performance of an index. They are traded on the market just like shares with the price determined by the forces of demand and supply.

Understanding Real Estate Investment Trusts (REITS) In Kenya

Types of ETFs in Kenya

There are various types of ETFs in the country such as

  • Stock ETFs- This type of ETF tracks stock equities in the market. They are the most common and popular.
  • Commodity ETFs-It is a form of ETF that invests in commodity futures, and physical commodities or invests in companies that trade in commodities. An example of a commodity is Gold, Silver, and Oil.
  • Index ETFs-Index ETFs invest by tracking the index funds in the market. An example of an index fund is the NSE 20. They operate like index funds.
  • BOND ETFs– These are ETFs that invest in bonds. Mostly, they thrive when the stock market is falling and they act as safer assets.

Benefits of investing in ETFs

  • Tax exemption– ETF traders benefit from capital gains tax exemption at the point of disposal ensuring more income for the investor.
  • Diversification– Investing in ETFs gives you a diversification advantage as opposed to investing in only one asset. This helps in risk mitigation and also increases the opportunities for returns.
  • Regulation– ETF investing in the country is regulated by the Capital Markets Authority and traded at the Nairobi Securities Exchange. This brings the element of stability and offers room for legal remedies.
  • Liquidity – The nature of this market allows you to buy and sell your investment easily. This enhances liquidity and you can access your money almost immediately.

ETFs in the Market

Currently, only one ETF is running in the market. This is the Absa Gold Backed Commodity ETF that was listed in 2016.

Parties involved in an ETF

  • Trustee – This is the party that is responsible for the protection of investor interests
  • Market Maker – The party is responsible for creating liquidity in the market by ensuring there are continuous two-way price quotes.
  • Manager – This is the fund manager that acts on behalf of the ETFs.

Hence, as an investor,Exchange Traded Funds (ETF) In Kenya is another area you should consider.


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