Exchange Traded Funds (ETFs) have become increasingly popular investment vehicles in Kenya over the last few years. ETFs provide investors with a convenient way to get exposure to a basket of stocks or other assets through a single security that trades on the Nairobi Securities Exchange. As the ETF market in Kenya continues to grow, here are some top ETFs in Kenya that investors should watch out for in 2024:
NewGold ETF
The NewGold ETF tracks the price of gold and provides Kenyan investors with easy exposure to the precious metal. Gold is considered a safe haven asset, especially during times of market volatility. With global economic uncertainty expected to continue, the NewGold ETF could see high demand from investors looking to add gold to their portfolios. The ETF will also provide exposure to gold without the hassle and high costs of owning physical gold.
SGI Pan Africa ETF
The SGI Pan Africa ETF provides investors with diversified exposure to equities across the African continent. The ETF tracks the S&P Pan Africa index, which covers over 85% of the total market capitalization in Africa. The index contains 30 large and liquid stocks across 13 major African exchanges including South Africa, Nigeria, Kenya, Egypt and Morocco. Sectors represented include financials, materials, telecom and consumer staples. The ETF offers a simple way for investors to tap into Africa’s growth potential and benefit from broad geographical and sector diversification across the continent. The SGI Pan Africa ETF can be a useful tool for investors looking for African equity exposure.
MSCI Emerging and Frontier (EFM) Africa ETF
The MSCI Emerging and Frontier (EFM) Africa Top 50 Capped index provides exposure to the largest and most liquid companies across 25 emerging and frontier African markets. The index captures large and mid cap representation with 50 constituents across sectors like financials, materials, and telecommunications. South Africa, Nigeria, Morocco and Egypt are the largest country weights. The index uses a capping methodology to ensure diversification and prevent heavy concentration in larger stocks. The EFM Africa Top 50 Capped can give investors broad exposure to growth opportunities across Africa.
Sector-specific ETFs
More sector-specific ETFs are worth looking at. Potential sectors include banking, healthcare, technology, and consumer goods. Sector ETFs allow investors to implement tactical asset allocation strategies by overweighting sectors they are bullish on. They also provide an easy way for investors to focus their exposure on fast-growing and promising sectors of the Kenyan economy.
Fixed Income ETFs
Fixed income ETFs which provide exposure to Kenyan government and corporate bonds could also be worth trading in 2024. These ETFs will give investors simplified access to Kenya’s debt markets and pay out regular income distributions. Fixed income ETFs help investors build more defensive portfolios and can provide stability during stock market volatility.
Kenya’s ETF industry is poised for rapid growth in the next 12 months. Investors should watch out for new ETFs focused on assets like gold, US tech stocks, Kenya equities, specific sectors, and bonds. As the ETF market expands, investors will have more tools to construct diversified portfolios and enhance their investment strategies.
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