Kenya's capital markets regulator has approved the listing of the first locally-domiciled exchange traded fund on the Nairobi bourse, signaling a key step in the push to diversify financial markets in East Africa's largest economy.

In a market update on Tuesday, the Capital Markets Authority (CMA) unveiled WSA Banking Index ETF, a fund issued by Wallstreet Africa Group Ltd in liaison with Tradiam Asset Managers Ltd to help track the performance of major bank stocks on the Nairobi Securities Exchange (NSE).

According to CMA, WSA Banking Index ETF will monitor and offer investors exposure to a portfolio of 11 listed banking industry equities in the Nairobi bourse.

WSA Banking Index ETF will join Absa NewGold ETF, and Satric MSCI World Feeder ETF, bringing to three the number of ETFs that are listed on the NSE.

While Absa NewGold ETF monitors the prices of gold in key markets, the Satric MSCI World Feeder ETF offers investors with vital exposure to equity trends in international markets.

The launch of WSA Banking Index ETF comes months after the Nairobi bourse unveiled the Banking Sector Index in October last year, offering investors a market capitalisation-weighted and float-adjusted benchmark that monitors shares of all listed banks.

WSA Banking Index ETF will be vital in tracking the traded stocks of major lenders in the region including Equity Group Holdings, KCB Group, Co-operative Bank of Kenya, Absa Bank Kenya, NCBA Group, Stanbic Holdings, I&M Group, Diamond Trust Bank, HF Group, BK Group, and Standard Chartered Bank Kenya.

According to CMA, the ETF is structured as an open-ended scheme whose units will be listed and traded on the NSE in Kenya Shillings. 

The fund will seek to replicate the performance of the designated NSE Banking Index by investing all its assets in the constituent banking sector shares comprising the index.

Unlike the two existing ETFs, which are linked to global assets and subject to forex considerations, the WSA Banking Index ETF is denominated in Kenya Shillings and its underlying banking shares are listed and traded in Kenya Shillings on the NSE. 

Investors will, therefore, not be exposed to foreign exchange risks arising from the fund's underlying investments.

This implies that the value of the ETF units will fluctuate in line with changes in the market value of the underlying banking sector shares and may be affected by factors including equity market volatility, interest rate movements, changes in the operating performance of constituent banks, regulatory developments, and broader macroeconomic conditions.

New product demand

CMA Chief Executive Officer Wyckliffe Shamiah said the rollout of the ETF aligns with the watchdog's ambition of facilitating curation of innovative products in the capital markets space. 

"This is expected to address the growing demand for innovative products, thereby allowing investors to diversify their portfolios and deepening the capital markets through an expanded scope of capital market products," he stated in part.

The approval comes as the NSE pursues an ambitious 2025-2029 strategy that envisions listing 50 funds on the bourse, in contrast with 40 listed companies, underlining the exchange's strategic bias toward listed funds as a vehicle for expanding investor participation.

The two existing funds have delivered strong returns, with the Satrix ETF rising 20.4 percent over the past year to KSh 941 per unit, and the Absa NewGold ETF trading at KSh 4,945 per unit, up from KSh 4,080 in July 2025.

The funds' performance has benefited from volatile global markets and rising demand for diversified investment products.

The banking industry has been a key driver of the NSE's strong performance in 2026, with investor wealth at the bourse appreciating by 55 percent or KSh 1.41 trillion to KSh 3.954 trillion. 

Investors experienced gains of between 40 and 100 percent on blue-chip banking stocks, including Equity Group, KCB Group and Co-op Bank.

[email protected]