Local asset managers expand ETF offerings

Over the past few years, there has been a noticeable change in the investment landscape. Local asset managers are now placing more emphasis on expanding their exchange-traded fund (ETF) offerings.

Investors have been increasingly drawn to ETFs because of their versatility, openness, and cost-effectiveness.

There is a noticeable shift towards offering a wider variety of investment options, which is fuelled by the increasing interest from both individual and institutional investors. They are looking for ways to invest in a wide range of asset classes without dealing with the complications and higher costs typically associated with traditional mutual funds.

At first, ETFs in Kenya were mostly focused on developed markets. However, this trend has quickly expanded to include emerging markets, such as South Africa and other African nations.

Asset managers in the local area have taken notice of the potential of ETFs and are actively introducing a range of new products to meet the unique requirements of their clients.

Local asset managers have been expanding their ETF offerings due to the growing awareness and understanding of these investment vehicles among the public. Investors are gaining a better understanding of the advantages offered by ETFs.

These include their capacity to mirror an index, sector, commodity, or even a particular investment theme. As people become more knowledgeable, they are increasingly seeking out ETFs that offer exposure to both local and international markets.

Diverse Offerings for a Diverse Investor Base

Asset managers in the local area are expanding their range of ETFs in Kenya and introducing a wider variety of options. In the beginning, the attention was on broad market indices, like those that keep track of the performance of the Johannesburg Stock Exchange (JSE) or other major indices.

But things are changing in the investment arena. Asset managers are now offering ETFs that focus on specific sectors, themes, and even ESG (Environmental, Social, and Governance) factors.
Investors can use sector-specific ETFs to focus on specific industries like technology, healthcare, or financial services.

This allows them to take advantage of the growth potential in these sectors. Thematic ETFs, in contrast, centre around long-term investment trends like clean energy, artificial intelligence, or the digital economy. Investors who are interested in aligning their portfolios with global megatrends and future growth areas may find these ETFs appealing.

ESG ETFs have become increasingly popular, particularly among younger investors who are placing greater importance on the ethical impact of their investments.

Asset managers in the local area are meeting the demand by providing ETFs that include companies with robust ESG practices. This enables investors to back sustainable and socially responsible business practices while also meeting their financial objectives.

ETFs offer a significant advantage in terms of affordability when compared to traditional mutual funds. Asset managers in the local area are taking advantage of this benefit by providing ETFs that have lower management fees, which makes them a compelling choice for investors who are mindful of costs.

ETFs are known for their transparency, as they disclose their holdings on a daily basis. This feature enhances investor confidence by ensuring they know exactly where their money is being invested.

Also, the simplicity of trading ETFs on the stock exchange has made them available to a wider range of people. ETFs provide investors with the advantage of being able to buy and sell them throughout the trading day, unlike mutual funds which are only priced once a day. This flexibility and liquidity make ETFs a more convenient option.

The increase in ETF options offered by local asset managers is a reflection of the growing movement to make investment opportunities more accessible and empower investors with the necessary resources to create well-rounded and affordable portfolios.

As investors increasingly realize the advantages of ETFs, local asset managers are expected to keep innovating and introducing new products to meet the changing needs of their clients. In the years to come, this ongoing development will bring about a more dynamic and inclusive investment environment, benefiting a wider range of investors.