The World’s seventh largest Gold ETF, New Gold ETF has today listed 400,000 gold bullion debentures on the Nairobi Securities Exchange (NSE).
Barclays Financial Services Limited (BFSL), the brokerage arm of Barclays Bank Kenya has been appointed to act as the sole market maker and the issue is open to all NSE investors who have a CDSC account.
Retail investors wishing to buy less than a hundred shares of the ETF will only do so from Thursday when the secondary market opens considering that the settlement period is on T+3.
However, anyone who will want to purchase or sell directly from the market maker (BFSL) will have to buy a minimum of 100 ETF shares.
The NewGold ETF to be traded on the Nairobi Securities Exchange will be KES denominated pegged on the KES equivalent of the prevailing market price of gold. Price movement of the ETF will be determined by the price movement of gold.
“There will be no intra-day price limit on the ETF and there will not be price limits between trading sessions. Each security references approximately 1/100 troy ounces of gold bullion.” said Michael Mgwaba- Head of Exchange Traded Product business for Barclays Africa Group.
This will be the first ETF of its kind in Kenya and will offer an opportunity to institutional and retail investors to invest in gold at a low management fee of 0.4% per annum while hedging against risks such as FX fluctuations and inflation.
NewGold debentures first listed on the Johannesburg Stock Exchange (JSE), with secondary listings on the ETF sector of the main board of the Botswana Stock Exchange, Nigeria Stock Exchange, Stock Exchange of Mauritius, Namibia Stock Exchange and Ghana Stock Exchange.
From the chart below, New Gold ETF has generated more than 400% in returns since its inception in 2004 and as at March 20th, it was valued at USD 1.4 billion.
Historically gold has always retained value and proved it is a safe haven investment in unsettled times, like during the 2008 global financial crisis when gold prices remained bullish while all other commodities plummeted to the lowest levels.