Money Market Funds (MMFs) are solidifying their position as a leading investment choice in Kenya. These funds offer individuals and institutions a reliable way to grow their savings, maintain liquidity, and preserve capital. As of January 2025, MMFs continue to dominate Kenya’s investment landscape, thanks to attractive returns and easy accessibility.
What Are Money Market Funds?
Money Market Funds are a type of Collective Investment Scheme (CIS) that pool resources from multiple investors and allocate them to short-term, low-risk financial instruments. These include:
- Government Securities: Treasury bills and bonds.
- Fixed Deposits: Bank savings with pre-set interest rates.
- Commercial Papers: Short-term corporate debt instruments.
The primary objectives of MMFs are:
- Capital Preservation: Ensuring the safety of the invested principal.
- Liquidity: Providing quick and easy access to funds.
- Modest Returns: Delivering better returns compared to traditional savings accounts.
The Growth of MMFs in Kenya
Kenya’s MMF sector has seen remarkable expansion. Data from the Capital Markets Authority (CMA) shows that as of September 2024, the total assets under management (AUM) for all CIS exceeded KSh 300 billion, with MMFs alone accounting for KSh 196.8 billion (62%). Though slightly lower than the 67.4% share in June 2024, MMFs remain a dominant investment vehicle.
Top Performing Money Market Funds in Kenya
Several MMFs stand out for their competitive returns and investor-friendly terms. Here are the top-performing funds:
- Lofty-Corban KSH Money Market Fund
- Net Return: 14.38% (after tax)
- Minimum Investment: KSh 1,000
- Key Features: Daily compounding interest, high liquidity, and focus on government securities.
- Etica Money Market Fund
- Net Return: 14.13%
- Minimum Investment: KSh 100
- Key Features: No lock-in period, low entry threshold, and instant liquidity.
- Cytonn Money Market Fund
- Net Return: 13.76%
- Minimum Investment: KSh 1,000
- Key Features: No entry or exit fees, daily interest accrual, and quick withdrawals.
- Kuza Money Market Fund
- Net Return: 13.63%
- Minimum Investment: KSh 5,000
- Key Features: Capital preservation and investments in short-term securities.
- Apollo Money Market Fund
- Net Return: 13.30%
- Minimum Investment: KSh 1,000
- Key Features: Flexible top-ups, low-risk focus, and guaranteed returns.
MMF Asset Allocation
To maintain security and liquidity, MMFs diversify investments across various asset classes. As of September 2024, the allocation was:
- Government Securities: 41.4%
- Fixed Deposits: 31.1%
- Cash and Demand Deposits: 14.7%
- Listed Securities: 1.9%
- Unlisted Securities: 3.1%
- Immovable Property: 0.9%
- Other CIS: 0.6%
- Offshore Investments: 6.2%
A notable trend is the surge in offshore investments, which grew by 4,282%, reaching KSh 19.6 billion, largely due to Mansa X special funds.
Market Leaders in Unit Trusts
Key players dominate Kenya’s MMF landscape, commanding significant market shares:
- CIC Unit Trust Scheme: Leading with a 22.3% market share, managing KSh 70.3 billion.
- Sanlam Unit Trust: Holding 14.8% with KSh 46.8 billion in assets.
- Jubilee Unit Trust: Achieving the highest growth in AUM, up by 90.7% to KSh 5.1 billion.
However, some funds experienced declines, such as MyXeno Unit Trust (down from KSh 16.1 billion to KSh 13.0 billion) and NCBA Unit Trust (decline of 0.3%).
Why Kenyans Choose MMFs
MMFs remain popular for their simplicity and accessibility. Key benefits include:
- Higher Returns: Offering better yields than traditional savings accounts.
- Liquidity: Quick access to funds, often within 48 hours.
- Low Entry Threshold: Starting investments as low as KSh 100.
- Diversification: Access to a varied portfolio reduces risk.
- Professional Management: Expert fund managers optimize returns.
Challenges Facing MMFs in Kenya
Despite their appeal, MMFs face certain challenges:
- Market Volatility: Fluctuations in interest rates can impact returns.
- Regulatory Risks: Stricter regulations could limit fund operations.
- Competition: Emerging digital savings platforms attract younger investors.
- Economic Factors: Inflation and currency depreciation may erode returns.
Final Thoughts
Money Market Funds in Kenya remain an excellent option for individuals seeking a balance of safety, liquidity, and modest returns. As the market continues to evolve, staying informed about trends and fund performance will help investors maximize their gains. Whether you are a seasoned investor or a beginner, MMFs provide a secure pathway to financial growth in 2025 and beyond.
