The Five (5) Questions You Already Have About ETF Investments

Its a new market place, yes…but worth knowing about it

You have probably heard about ETFs but you don’t know what they are…

If you relate to the statement above, then this blog is for you 🙂

What is an ETF?

Exchange-Traded Fund (ETF) is a pooled investment that holds a combination of multiple financial assets (stocks, bonds etc.).

…but this fund is listed and traded (bought and sold) on a stock exchange as a single share.

What are the existing ETFs in Tanzania?

There are now two (2) existing ETFs;

Vertex International Securities ETF (VIS-ETF)

This fund was listed in October 2025 as Tanzania’s first ETF. The fund is a basket of diversified actively traded Tanzanian equities (stocks) on the Dar es Salaam Stock Exchange (DSE). Its IPO was oversubscribed by 136%.

iTrust East African Community (EAC) Large Cap ETF

This fund follows second, commenced in January 2026. The fund is focused on large-cap equities (stocks) in the East African Community (EAC). Its IPO was oversubscribed at a 540% rate.

How do you benefit from investing in ETFs?

Just like investing in stocks, you get two (2) advantages in investing in ETFs;

Capital Growth when the ETF share price increases
Dividends or Income Generation if paid by the individual assets involved (based on how the assets performed)

What is the relationship between NAV per unit and the ETF Market Price?

Unlike mutual funds, the Net Asset Value per unit is not the same as the share price in the market.

They can vary significantly.

Lets describe them first, in case you are not aware of the 2 (two) terms;

Net Asset Value (NAV) per unit is the “intrinsic value” or the real value of the ETF. In Swahili it’s ‘thamani halisi ya kipande’.

You simply minus the liabilities of the fund (expenses and debts) from the assets (income generators) of the fund and then divide by the number of shares.

The NAV per unit is calculated after every market day (Monday to Friday except Public Holidays).

Market Price is the price at which you buy or sell the ETF on the Dar-es-Salaam Stock Exchange.

This price, just like stocks, changes based on the supply and demand.

And,

If the Market Price is greater than the NAV per unit, it means you are buying the share at a premium / an overprice.

Like buying a 500ml drinking water bottle at a price of 4,000/= at a high-end restaurant or a five-star hotel like Serena.

A higher price can also be due to a high demand.

If the Market Price is less than the NAV per unit, it means you are buying the share at a discount price / a fair price / an underprice.

What are the disadvantages of investing in EFTs?

You do not have control over holdings. For instance, if the index has 5 companies and one company does not perform well, your good performers are diluted by the poor performer
You do not have voting rights in individual companies in the index as a stock shareholder have
You have only two (2) options in the Tanzanian market at the moment, a young market; it is either Vertex or iEACLC unlike the stock market and collective schemes (mutual funds)
You incur trading costs such as broker commissions like stocks and even currency exchanges (when a foreign currency is involved).