When looking to grow your savings with less risk, money market funds in Kenya offer an attractive avenue for investment.
These funds provide a secure place to park your money while earning better returns than traditional savings accounts.
Their popularity is growing due to their ability to offer liquidityLiquidity refers to the ease with which assets can be converted into cash without significantly affecting their market price. This concept is crucial ... ... and income generation, making them an essential component of a savvy investor’s portfolio.
But, first, let’s answer the critical question:
What is a money market fund?
A Money Market Fund (MMF) is a type of mutual fund that invests in low-risk, short-term asset classes, such as commercial paper, treasury bills, and fixed deposits.
These funds are overseen by professional fund managers who aim to provide investors with stable investment returns while preserving capital.
In Kenya, MMFs are regulated by the Capital Markets Authority (CMA) and are considered a low-risk investment option due to their extensive oversight.
MMFs are a convenient and accessible way for individuals to grow their savings in Kenya, with a minimum investment of as low as KES 100.
They are particularly suitable for risk-averse investors who are wary of market volatility and looking for a safe investment option.
The custodian of the fund ensures the safekeeping of investors’ money until investment decisions are made, while the trustee oversees the fund manager and custodian to ensure proper management.
Things to note:
- Your earnings are subject to 15% withholding tax
- Most MMFs show interest before tax and other fees
- Withdrawing funds is not instant, most MMFs process and publish withdrawals in 1-3 working days, with some in 2-4 days
- Interest rates fluctuate daily based on the prevailing market conditions
- Interests are usually compounded on a daily, weekly, or monthly basis.
The average interest generated by MMFs is dependent on the current inflation rate.
Now, the inflation rate for Q1, 2024 stood at 6.3%, which is lower than 7% which was the base for 2023.
This low rate is attributed to the reduced food and fuel prices.
What to consider when choosing a money market fund in Kenya
Here are some things to consider when choosing a money market fund in Kenya:
Investment goals:
- Liquidity: How easily do you need to access your money? Money market funds are known for their high liquidity, but some may have limitations on withdrawals. Consider how often you might need the cash.
- Investment horizon: Money market funds are suitable for short-term goals (less than a year). If you have a longer timeframe, you might consider other investment options.
Returns and fees:
- Interest rates: Compare the interest rates offered by different money market funds. Keep in mind that these rates can fluctuate.
- Fees: There are typically three main fees associated with money market funds: initial fees, management fees, and redemption fees. Understand the fee structure of each fund before investing.
Security and reputation:
- Underlying investments: Money market funds invest in various securities. Look for funds that invest in high-quality, low-risk assets like government treasury bills or bonds from reputable institutions.
- Fund manager: Research the experience and track record of the fund manager.
Additional factors:
- Minimum investment amount: The minimum amount required to invest can vary between funds.
- Convenience: Consider how easy it is to invest in and redeem units from the fund. Look for platforms with digital access and easy transactions.
Top Money Market Funds in Kenya
When looking for the best money market funds in Kenya, you often look for exceptional MMF returns, safety, and stability.
Here’s a detailed look at some of the top contenders in the market.
Table of contents
1) Etica Capital MMF
Etica Capital Ltd is a licensed fund manager based in Nairobi, Kenya, founded in 2021, and has been gaining quite a good amount of traction, because of high yields.
The company specializes in managing mutual funds, including the Etica Money Market Fund (MMF) which focuses on obtaining a high level of current income while protecting investors’ capital.
The fund manager for the Etica MMF is Etica Capital Ltd, which is a member firm of the Investment and Financial Analysts Association (ICIFA) in good standing and regulated by the Capital Markets Authority.
- Minimum investment: KES 100
- No lock-in period
- Initial fees: none;
- Management fees: 2.0% p.a
The trustee for the Etica MMF is Co-operative Bank Kenya Ltd, and the custodian is Equity Bank Kenya Ltd, providing a strong foundation of trust and security for investors.
Etica Capital Ltd offers a simple tech-based onboarding process for clients, with a user-friendly app that enables self-onboarding in minutes and provides access to manage investments under the Collective Investment Schemes.
The app also allows clients to initiate transactions such as deposits, withdrawals, transfers, and utility payments, with statements available for viewing and downloading instantly.
2) Cytonn Money Market Fund
Cytonn Money Market Fund (CMMF) is managed by Cytonn Asset Managers Limited (CAML), a regulated affiliate of Cytonn Investments Management Plc.
CAML is licensed by both the Capital Markets Authority (CMA) and the Retirement Benefits Authority (RBA) in Kenya. The company began operations in May 2018 after acquiring Seriani Money Market Fund, now known as CMMF.
The fund invests in high-quality interest-bearing investments, fixed deposits, and near cash holdings in the Kenyan market, making it an ideal choice for conservative, low-risk investors seeking stability and security for their capital.
The custodian of CMMF is the Co-operative Bank of Kenya, while the trustee is Kenya Commercial Bank of Kenya.
The fund offers competitive returns, with interest calculated daily and credited to the client’s account net of costs.
- Minimum investment: KES 1000
- No lock-in period
- Initial fees: none
- Management fees: 1.5% p.a
To invest, Cytonn money market fund offers a web platform, USSD code, or the Cytonn App. You can withdraw money to your M-Pesa or a bank account.
The Cytonn Money Market Fund is known for its impressive yield, among the highest in the Kenyan market.
You can expect an effective annual rate of around 11.0%, which has remained consistent over the past year, marking it as a strong choice if you’re seeking good returns with a well-established fund.
3) Safaricom Mali MFF
The Safaricom M-PESA Mali Investment Fund (MFF) is a mobile-based investment product offered by Safaricom PLC.
The MFF operates as a mini-app within the M-PESA app and is managed by Genghis Capital.
The fund is designed to provide an opportunity for M-PESA subscribers to invest their money in Unit Trust, and earn daily interest over time.
The Trustee of the MFF is KCB Bank (Kenya) Limited, a reputable financial institution in Kenya, responsible for safeguarding the interests of the investors and ensuring compliance with the Trust Deed.
- Minimum initial investment: KES 100
- No lock-in period
- Income compounding: Monthly
- Deposits and redemptions are free
- M-Pesa transaction limits apply
The MFF offers competitive returns to investors, with an average return rate of 10% per annum.
To invest in the MFF, customers must be at least 18 years old, be registered and active M-PESA subscribers for at least three months, and have a valid national identification card or passport.
Customers can opt-in to the MFF solely through electronic applications made via the USSD, System Menu, and M-PESA App.
The MFF is regulated by the Capital Markets Authority of Kenya, which ensures compliance with the relevant laws and regulations governing investment products in Kenya[1]. The fund is also subject to the provisions of the Trust Deed, which sets out the rights and obligations of the fund manager, trustee, and investors[1].
In conclusion, the Safaricom M-PESA Mali Investment Fund offers an accessible and convenient investment opportunity for M-PESA subscribers in Kenya, with competitive returns, flexible investment terms, and a reputable fund manager and trustee.
4) CIC Money Market Fund
The CIC Money Market Fund (CIC MMF) is managed by CIC Asset Management Ltd, a company that has been in operation since 2007 and licensed as a fund manager in June 2011.
The custodian of the fund is Co-op Custodial Services, and the trustee is Kenya Commercial Bank.
- Minimum investment: KES 5,000
- Minimum monthly additional investment: 1,000
- Funds under management: KES 53 Billion
- Management fee: 2% p.a
- Distribution done monthly
The fund offers competitive returns with interest calculated daily and credited monthly, benefiting from placing deposits in large sums to negotiate for competitive rates.
Investors can enjoy liquidity by being able to withdraw their funds at short notice with no penalty fees, and the fund provides a high degree of capital stability with limited risk, focusing on capital preservationCapital preservation is a key investment objective for many investors, especially those who are risk-averse or nearing retirement. In the context of i... ... while offering inflation protection.
5) Sanlam Money Market Fund
The Sanlam Money Market Fund (MMF) is a conservative investment option in Kenya, managed by Sanlam Investments East Africa Limited.
Established in 2014, the fund focuses on capital preservation and offers compounded interest to its investors.
The fund invests in high-quality securities such as Treasury bills and bonds, fixed deposits with financial institutions, and corporate debt.
- Minimum investment: KES 2,500
- Minimum top-up amount: KES 1000
- Management fee: 1.2%
- Income distribution: Monthly
- Assets under management: KES 22 billion
- Funds accessibility: 3 working days from request
- One free withdrawal per month
- Subsequent withdrawals incur a transaction fee of KES 500
The latest return rates for the fund are 1.2% for one month, 3.9% for three months, and 13.0% for twelve months, with an annualized return of 13.0% since inception.
6) Apollo Money Market Fund
The Apollo Money Market Fund in Kenya is managed by Apollo Asset Management Company Ltd.
This fund has been in operation for several years, offering investors a low-risk investment option with guaranteed returns.
- Minimum initial investment: KES 1,000
- Minimum top-up amount: KES 1,000
- Withdrawal processing time: 3 days
Investors can make top-ups through various methods such as cheques, cash deposits, standing orders, or direct debit orders.
It ensures that you can earn competitive rates, which were recently reported to be as high as 15.05% on an average daily basis, making it a compelling option for your investment portfolio.
7) Nabo Money MARKET FUND
Nabo Money Market Fund (Nabo MMF) in Kenya is managed by Nabo Capital and has been in operation for a period of time.
- Minimum initial investment: KES 100,000
- Minimum top-up amount: KES 10,000
- Minimum lock-in period: 3 months
- Withdrawal processing time: 2 days
- Zero initial and redemption fees
- Income compounding: daily
- Management fee: 2% pa
Nabo MMF offers an average daily yield of 11.09%
8) NCBA Money Market Fund
NCBA MMF is managed by NCBA Investment Bank, a subsidiary of the NCBA Group PLC, which is one of the largest financial services groups in East Africa.
The fund has been in operation for several years, offering investors a relatively stable investment option to preserve capital and provide modest returns.
- Minimum initial investment: KES 5,000
- Minimum top-up amount: KES 5,000
- Withdrawal processing time: 3 working days
- Income credited: Monthly
- Management fee: 2% pa
9) Old Mutual Money Market Fund
The UAP Old Mutual Money Market Fund is a stable investment option in Kenya that offers a competitive interest rates.
This fund is managed by Old Mutual Kenya, a reputable financial services provider with a long-standing presence in the market.
- Minimum initial investment: KES 1,000
- Minimum top-up amount: KES 1,000
- Withdrawal processing time: 3 days
- Income compounding:
- Management fee: 2% pa
Other licensed money market funds in Kenya (list)
- Zimele money market fund
- Co-op Money Market Fund
- Britam Asset Managers
- FCB Capital
- ICEA Money Market Fund
- Madison Money Market Fund
- GenCap Hela Fund
- Mali Money Market Fund
- Diaspora Money Market Fund
- Equity Investment Bank Money Market Fund
- Sanlam investments
- Dry Associates Money Market Fund
- Nabo Africa Money Market Fund
- Standard Chartered Investment Services
- Absa Shilling Money Market Fund
- Kuza Money Market Fund (
- Boda Riders Money Market Fund
- Orient Kasha Money Market Fund
- ADAM Money Market Fund
- GenAfrica Money Market Fund
- Jubilee Money Market Fund
- African Alliance Kenya Managed Fund
Each of these funds offers a different balance of return, safety, and stability, making it important for you to consider your personal financial goals and risk appetite when choosing where to invest your money.
