Kenya’s exchange-traded fund market has moved beyond its long-standing reliance on a single gold product. The Nairobi Securities Exchange now has three ETFs, giving investors exposure to physical gold, developed-market equities and Kenyan banking shares through securities that can be bought and sold on the exchange.
Absa NewGold, listed in 2017, was Kenya’s only ETF for eight years. The Satrix MSCI World Feeder ETF joined the market in 2025, opening access to large- and mid-cap companies across developed markets. In August 2026, the Capital Markets Authority approved the WSA Banking Index ETF, Kenya’s first locally domiciled ETF, bringing the NSE total to three.
For investors, the wider choice makes understanding how ETFs actually work more important. An ETF can simplify access to a portfolio, but it does not remove investment risk, guarantee liquidity or protect investors from losses.
What is an ETF?
An exchange-traded fund is an investment fund whose units trade on a securities exchange like shares. Instead of buying every security in a portfolio separately, an investor buys units in one fund that provides exposure to a defined basket, asset or investment strategy.
Many ETFs track an index. An index is a rules-based measure of a group of securities, with a methodology that determines what is included, how constituents are weighted and when the basket is reviewed. Other ETFs can track commodities or use actively managed strategies.
ETFs available in Kenya
The three ETFs currently on the NSE provide very different exposures:
|
ETF |
Exposure |
What it provides |
|
Absa NewGold ETF |
Physical gold |
Exposure to the international gold price |
|
Satrix MSCI World Feeder ETF |
Developed-market equities |
Exposure to large- and mid-cap companies across developed markets |
|
WSA Banking Index ETF |
Kenyan banking Equities |
Exposure to the 11 banking groups in the NSE Banking Index |
NewGold gives investors commodity exposure without having to buy and store physical gold themselves. Because gold is internationally priced in US dollars, a Kenyan investor’s return can also be affected by currency movements.
Satrix MSCI World gives NSE investors access to developed-market equities through a locally traded security. Its benchmark spans large- and mid-cap stocks across 23 developed markets, meaning its performance is driven by global equity markets as well as foreign-exchange movements.
The WSA Banking Index ETF is designed to track the NSE Banking Index. Its basket comprises Equity Group, KCB Group, Co-operative Bank, Absa Bank Kenya, NCBA Group, Standard Chartered Bank Kenya, Stanbic Holdings, I&M Group, Diamond Trust Bank, HF Group and BK Group. Unlike the two foreign-asset products, both the fund and its underlying shares are Kenya-shilling denominated.
How does an ETF work?
An ETF has an underlying portfolio and a market price. Net Asset Value, or NAV, represents the fund’s assets minus its liabilities, expressed on a per-unit basis. The market price is what investors actually pay or receive when units trade on the NSE.
The two can differ. If an ETF with a NAV of KSh 100 trades at KSh 102, it is at a 2% premium; at KSh 98, it is at a 2% discount. Market makers provide buy and sell quotations, while authorised participants can create or redeem large blocks of ETF units. Together, these mechanisms help keep the trading price aligned with the value of the underlying assets.
Investors should also look at the bid-ask spread, the gap between the best buying and selling prices. A wide spread increases the effective cost of trading, particularly in a thinly traded ETF.
ETF, individual shares or a unit trust?
The main distinction is how the investment is packaged and traded. Buying one company’s shares gives direct exposure to that company. An equity ETF can spread an investment across several companies in one transaction and rebalance the basket according to its mandate.
A unit trust also pools investors’ money, but units are generally bought from or redeemed with the fund rather than traded continuously on an exchange.
ETFs trade during market hours at market prices, which means investors must consider liquidity and bid-ask spreads. Neither structure is automatically cheaper; the comparison depends on the specific fund, fees, portfolio and risks.
What does an ETF cost?
ETF costs come from more than one place. The Total Expense Ratio (TER) measures recurring fund operating expenses as a percentage of assets and is reflected in the fund’s performance rather than charged as a separate bill. Investors can also incur brokerage and market-related charges when buying or selling.
Trading itself has a cost. The bid-ask spread and any premium to NAV can make the effective purchase price higher, while selling at a discount can reduce proceeds. Investors should therefore compare the fund’s TER, trading charges, spread and liquidity rather than relying on a single fee number.
How to buy an ETF in Kenya
ETFs are bought through the same market infrastructure used for NSE-listed shares. An investor needs a CDS account and access to a licensed stockbroker or investment bank. After funding the trading account, the investor can select the ETF, review the prevailing bid and ask prices, choose the number of units and place an order through platforms like Hisa and Ziidi.
Before buying, investors should read the ETF’s prospectus or factsheet and understand what it tracks, its fees, currency exposure, liquidity and whether income generated by the underlying assets is distributed or reinvested.
How are ETFs taxed in Kenya?
Gains from securities traded on a securities exchange licensed by the CMA are exempt from Capital Gains Tax, according to the Kenya Revenue Authority. This means the 15% CGT that applies to taxable capital gains should not be applied to gains from selling NSE-traded ETF units.
Income distributions require separate consideration because their tax treatment can depend on the fund structure, the type of income and the investor. Investors should check the current product documentation and applicable tax rules for the particular ETF.
What are the risks?
An ETF is a regulated investment vehicle, not a guaranteed investment. Its value can fall when its underlying assets decline. A banking ETF remains exposed to banking-sector risk even though it holds several banks; a global equity ETF remains exposed to global market and currency movements; and a gold ETF remains exposed to changes in the gold price.
Investors should also consider liquidity, tracking difference, bid-ask spreads and the possibility that an ETF trades above or below NAV. CMA guidance states that ETFs are not capital protected, meaning an investor can receive less than the amount originally invested.
What should investors check before buying?
Start with the underlying exposure: what does the ETF actually own or track? Then examine its largest holdings or concentration, TER, trading liquidity, bid-ask spread, currency exposure and how closely it follows its benchmark.
The ETF label describes the investment vehicle; it does not by itself make a product diversified, low-risk or low-cost.
Frequently Asked Questions
Can I lose money in an ETF? Yes. ETF values move with their underlying investments and can fall.
Is NAV the same as the market price? No. NAV measures the per-unit value of the fund’s net assets, while the market price is the price at which investors trade the ETF.
What is a market maker? A participant that posts buy and sell prices, helping support liquidity and orderly secondary-market trading.
What is an authorised participant? An institution permitted to create or redeem large blocks of ETF units against the prescribed underlying basket or cash, depending on the fund structure.
Are ETFs capital protected? No. Regulation does not guarantee investment returns or repayment of the amount invested.