Kenya’s market regulator, the Capital Markets Authority (CMA), has granted approval for the listing of the country’s first exchange-traded fund, the NewGold ETF.

Paul Muthaura, Chief Executive, Capital Markets Authority.

The NewGold ETF was first listed on the Johannesburg Stock Exchange in 2004 and has subsequently been cross-listed across other African exchanges including Botswana, Nigeria and Ghana, as well as on the Mauritius Stock Exchange.

The move will pave the way for the trading of gold through the Nairobi Securities Exchange, diversifying the current offering comprised of local equities and bonds only.

CMA Chief Executive Paul Muthaura commented: “This is a critical milestone in positioning Kenya as a gateway for regional and international capital flows by developing creative products that promote investor confidence in regional products. This is a step toward Kenya becoming a choice investment destination.”

NewGold, provided by NewGold Issuer, continuously tracks the gold spot price and enables investors to invest in a listed instrument (structured as a debenture) in which each security is equivalent to approximately 1/100th ounces of gold and is fully backed by holdings of gold bullion with Barclays Bank.

The 400,000 debentures planned to be issued through the Nairobi listing will rank equally with all existing gold bullion debentures already in issue through the NewGold ETF, notes the CMA.

The ETF has a total expense ratio of 0.40%.

The listing price of the ETF will be determined on the listing date, based on the real time cash market values of the gold price and the real time price of the Kenya Shilling.

The listing highlights the benefit of ETFs in providing an opportunity for investors in emerging market countries to diversify their investment portfolios with access to international products.