Kenya’s Capital Markets Authority has approved what will become the third ETF in Kenya as the value of companies listed at the Nairobi Securities Exchange (NSE) rises above KSh4 trillion for the first time.
The WSA Banking Index ETF will track 11 listed lenders and become Kenya’s first locally domiciled exchange-traded fund. Its approval comes after the Nairobi Securities Exchange added KSh1.05 trillion in market value during the first seven months of 2026, with banks accounting for more than half of recent equity turnover.
The fund will likely start trading in the fourth quarter after completing the remaining NSE listing and operational requirements.
Third NSE ETF Will Track Sector Behind 55% of Turnover
The open-ended fund will replicate the NSE Banking Index by investing in lenders including Equity Group, KCB Group, Co-operative Bank, Absa Bank Kenya and NCBA Group. Both the units and underlying shares will be denominated in Kenyan shillings, removing direct foreign-exchange exposure from the portfolio.
CMA chief executive Wyckliffe Shamiah said the product was “expected to address the growing demand for innovative products” while giving investors more ways to diversify.
The new NSE ETF will join two funds that currently trade in Kenya. The Absa NewGold ETF tracks physical gold, while the Satrix MSCI World Feeder ETF gives local investors exposure to large and mid-sized companies across developed markets.
BlockMara previously reported that Kenyan investors were turning to the Absa NewGold ETF as bullion prices and local trading volumes increased. The WSA fund changes the mix by giving investors diversified exposure to domestic banking shares through one security.
Its timing follows a sharp expansion in the wider market. NSE capitalisation increased 35.57% from KSh2.945 trillion at the end of 2025 to KSh3.992 trillion on July 31, according to Soko Analyst. The market crossed KSh4 trillion on August 3.
Banks generated 55.38% of equity turnover in the week ending August 14. Local investors accounted for 76.2% of turnover, helping the market absorb KSh1.17 billion in net foreign selling across the five sessions.
NSE Plans AI Fund Amid Record Market Rally
The exchange is already preparing another addition. It plans to introduce East Africa’s first AI-focused ETF by the end of 2026, giving Kenyan investors a locally traded route into global companies with significant artificial-intelligence exposure, per a report by Reuters.
The AI proposal would extend the exchange’s product range beyond gold, global equities and domestic banking stocks. It also reflects the NSE’s effort to retain investment that might otherwise flow overseas because of the limited range of locally listed products.
For the NSE ETF market, the banking fund is the immediate milestone. It links Kenya’s strongest area of trading activity to a locally structured product, while the proposed AI fund indicates that more thematic offerings could follow as domestic participation grows.
