Absa Bank Kenya targets to launch a Morgan Stanley Capital International (MSCI) World Index- linked Exchange Traded Fund (ETF) on the Nairobi Securities Exchange within the second quarter of 2025.
This move would hand investors at the bourse exposure to large and mid-sized companies listed in developed economies.
This will be East Africa’s second ETF listed on the Nairobi bourse, joining the Absa NewGold ETF, which was on the exchange in March 2017 and tracks the spot price of gold in the global markets and allows retail and institutional investors in the region to get exposure to gold investments.
An ETF is an investment fund that holds multiple underlying assets and can be bought and sold on an exchange, much like an individual stock. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of stocks.
“We are at the tail end of the licensing and once that is secured, I expect that by the end of the first quarter or latest within the second quarter, the ETF should be in the market. We have gone through the governance process and have received a lot of support from all the regulators involved to ensure that this instrument is ready to go to market”, Absa Bank managing principal for corporate and investment banking, James Agin, told the Business Daily.
The MSCI World Index captures 1,395 large and mid-size companies listed across 23 developed economies including the US, UK, Switzerland, Singapore, Germany, Israel, Japan, France, and Australia.
Presently, the top constituent companies of the MSCI World Index by market capitalisation are Apple, Nvidia, Microsoft, Amazon, Facebook’s parent company Meta, Google’s parent company Alphabet, Broadcom, Tesla, and JP Morgan.
ETFs have gained popularity recently, as investors across markets scout for simplified vehicles that allow them to gain exposure in jurisdictions other than their own.
ETFs also present investors with an opportunity to diversify their holdings away from traditional equities and fixed-income investments.
“There’s a need to continue introducing packaged investment products that allow people to invest in different asset classes that give them different risk profiles. We have our Absa Securities Ltd, which holds our investment banking licence and is actively engaged in bringing different types of Exchange Traded Funds into the market,” said Mr Agin.
In October 2024, South Africa’s Johannesburg Stock Exchange listed the Satrix MSCI World Feeder Index, offering investors exposure to large and mid-sized companies that are Shariah compliant.
