Investing in the Absa Gold ETF listed on the NSE

4 Jun

Hello,

Investors in Kenya and the wider East African region have long had the opportunity to trade in Exchange Traded Funds (ETFs) following the launch of the Absa NewGold ETF on the Nairobi Securities Exchange (NSE). This groundbreaking ETF, also listed on the Johannesburg Stock Exchange (JSE), has enabled investors to invest in an instrument that tracks the price of gold bullion, providing a stable and reliable investment option.

The Barclays NewGold ETF, a product of NewGold Issuer (RF) Limited, with Barclays Financial Services Limited (BFSL) as the authorized representative in Kenya, trades like a normal equity security and is subject to similar tax treatments, denominated in Kenyan Shillings (KES). The ETF's price reflects the KES equivalent of the international market price of gold in USD. Each NewGold security corresponds to approximately 1/100th of an ounce of gold held in a secure depository, backed by physical gold, ensuring its value aligns with the gold market.

Since its introduction, the NewGold ETF has positioned Kenya as a significant player in the ETF market within the Barclays Africa Group. Valued at approximately USD 1.4 billion at launch, it remains the largest gold ETF in Africa and one of the largest globally. The initial offering of 400,000 units valued at nearly half a billion shillings demonstrated strong market potential, with continued growth over the years.

This ETF is a critical product of financial innovation, common in developed markets, offering benefits such as risk diversification, portfolio diversification, and ease of transaction. The NSE continues to support the growth of the ETF market through dedicated business development and public education programs, encouraging more investor participation.

First listed in South Africa in 2004, the NewGold ETF has successfully expanded to Botswana, Nigeria, Ghana, Mauritius, and Namibia. Managed by NewGold Manager (Pty) Ltd, the ETF ensures that the gold is of South African origin, securely held by ICBC Standard Bank, insured, allocated, and independently audited.

For investors looking to diversify their portfolios and invest in a stable asset, the Barclays NewGold ETF remains an attractive option. Kenya's robust position as a leading stock market hub in Sub-Saharan Africa, now enhanced by its established ETF market, offers a promising investment landscape for both local and international investors.