The Nairobi bourse is set to welcome its second Exchange Traded Fund (ETF) next week with the dual-listing of South Africa’s Satrix MSCI World ETF.
The Sanlam-owned ETF, which is primarily listed on the Johannesburg Stock Exchange (JSE), will have an initial allocation of six million units available to local institutional and retail investors, although the company will not exhaust the allocation in one go.
The ETF was listed on the JSE in 2017 and has now reached a valuation of about 10 billion Rand (Sh72.8 billion). The ETF will charge fees of 0.35 percent per year.
It will be listed on the Nairobi Securities Exchange (NSE) on July 16, joining the Absa NewGold ETF which was listed in March 2017 tracking the spot price of gold in the international markets.
“The ETF gives investors a local currency investment for a global asset, offering an opportunity for diversification and easier access to developed market stocks,” said Duma Mxenge, head of business and market development at Satrix in an interview.
An ETF is an investment instrument or fund which holds underlying assets, in which investors can buy and sell units, much like they do on an individual stock. ETFs can be structured to track a wide array of assets including commodities and a collection of stocks.
The Satrix MSCI World ETF captures more than 1,300 large- and mid-cap stocks across 23 developed market countries including the US, UK, Japan, Switzerland and Germany.
The companies included in the fund all comply with the size, liquidity and free-float criteria of the closely watched MSCI World Index, whose top constituents comprise global giants such as Apple, Nvidia, Microsoft, Amazon, Meta, JP Morgan Chase and Alphabet, Google's parent company.
The US firms account for about 70 percent of the underlying stocks of the ETF, but the largest of them (chip maker Nvidia) has a weighting of 4.5 percent.
Mr Mxenge added that the ETF carried a dollarised annual rate of return of 13.72 percent in the 12 months to May 2025, equivalent to a shilling denominated return of 12.58 percent—due to the local unit’s appreciation versus the US counterpart in the period.
Over a three-year period, the dollar return was 13.18 percent, converting to 17.06 percent in shilling terms, while the five-year dollar return stood at 14.18 percent, or 18.61 percent when converted to shilling terms.
ETFs have gained popularity recently, as investors across markets scout for simplified vehicles that allow them to gain access in jurisdictions other than their own, without incurring the cost and hassle of cross-border investing.
They also offer investors an opportunity to diversify their holdings away from traditional standalone equities and fixed income investments, while also spreading their risk away from the single-stock investments.
Commodity linked funds such as the Absa NewGold ETF also offer investors a path to safe haven assets such as gold and platinum in times of market shocks, protecting value of investments that would have otherwise been lost in volatile equities.
