The No.1 FAQ on Money Market Funds in Kenya
Find the answers to Frequently Asked Questions (FAQs) about Money Market Funds in Kenya.
I also address the common concerns of a beginner investing in MMFs.
Let’s get to it…
Here are the money market funds in Kenya ranked by yield:
| Rank | Fund Manager | Effective Annual Rate |
|---|---|---|
| 1 | Cytonn Money Market Fund | 10.8% |
| 2 | Kuza Money Market Fund | 10.2% |
| 3 | Apollo Money Market Fund | 10.1% |
| 4 | Zimele Money Market Fund | 9.9% |
| 5 | GenCap Hela Imara Money Market Fund | 9.9% |
| 6 | Nabo Africa Money Market Fund | 9.8% |
| 7 | NCBA Money Market Fund | 9.8% |
| 8 | Old Mutual Money Market Fund | 9.7% |
| 9 | Sanlam Money Market Fund | 9.6% |
| 10 | Madison Money Market Fund | 9.6% |
| 11 | AA Kenya Shillings Fund | 9.4% |
| 12 | Dry Associates Money Market Fund | 9.3% |
| 13 | Co-op Money Market Fund | 9.3% |
| 14 | CIC Money Market Fund | 9.2% |
| 15 | Britam Money Market Fund | 8.9% |
| 16 | ICEA Lion Money Market Fund | 8.8% |
| 17 | Orient Kasha Money Market Fund | 8.6% |
| 18 | Absa Shilling Money Market Fund | 8.1% |
| 19 | Equity Money Market Fund | 7.7% |
Money Market Funds, also known as MMFs are a type of unit trusts in Kenya. They invest primarily in short term money market instruments and thus are considered low risk and liquid investments. However, they offer better returns than most asset classes in Kenya.
Unit trusts are collective investment schemes in Kenya. They pool funds collected from individuals and invest in various asset classes.
These are tools to borrow and lend money. However, the borrower pays the lender interest for the convenience of using their money. He also repays the amount borrowed (principal) at the end of the agreed period.
Personally, CIC MMF and Sanlam MMF are the best money market funds in Kenya. Firstly, they have great customer service. Secondly, there is no hustle when withdrawing your money. In case of an emergency, you get your money within 3 days or less.
Finally, both are part of large entities which acts as a buffer for unforeseen events.
You need the following documents to open a money market account in Kenya:
- Filled application form
- Copy of your passport photo
- Copy of your National ID card or Passport
- Copy of your banking details
- Copy of your KRA PIN
The minimum cash you can start with depends on the money market fund. Sanlam Money Market Fund has one of the lowest initial investment amount of Kes 2,500. CIC Money Market Fund minimum initial investment is Kes 5,000.
The minimum amount you can top up with is Kes 1,000 for both CIC MMF and Sanlam MMF.
Money market funds are unit trusts that pool investors’ funds and then invest in Kenyan money market instruments.
All units trusts in Kenya are required to have a CMA approved fund manager, custodian, trustee and auditor. Each of the four has a separate role in how the money market fund works.
See further insights on how Kenyan MMFs work in Chapter 3 of the CMA Handbook.
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Money Market Funds charge a management fee for the valuable services they give. In Kenya, most Money Market Funds charge a management fee of 2%.
Sanlam Money Market Fund has the lowest management fee of 1.2%. This is one of the reasons why I consider them one of the best money market funds in Kenya.
In the long term, the best performing money market funds in Kenya offer reasonable and consistent returns. That is, you expect their interest rates to compare favorably to the Treasury Bill rates.
Be careful with anyone offering higher money market rates than the 364 Day Treasury Bill. Similarly, avoid unit trusts in Kenya that offer money market rates lower than the 91 Day Treasury Bill. The latest Treasury Bill rates can be found here.
The Fund manager’s work is to invest the pool of funds on behalf of the MMF’s customers (unitholders). You want a licensed fund manager who has a track record of offering consistent and reasonable returns.
The Custodian’s work is to hold the assets under management on behalf of the unitholders. The custodian is typically a bank or a financial institution approved by the Kenyan CMA.
The Fund Manager doesn’t have access to your money. They can only instruct the custodian to invest your money as per the investment policy of the Fund.
The Trustee holds everyone accountable on behalf of the unitholder. They are responsible for the governance of the money market fund. They are usually a CMA approved bank or financial institution.
The Auditor’s work is to review the financial statements of the Money Market Funds and give an opinion as to whether they are true and fair.
The unitholders can then rely on the audited financials statements to assess the performance of the Money Market Funds Kenya options available to them.
Money market funds are low risk investments and are relatively safe. This is because the best money market funds in Kenya offer to protect the amount invested.
Secondly, they are set up to safeguard your money by separating the various functions among the fund manager, custodian, trustee and auditor.
Thirdly, the Capital Markets Authority (CMA) ensures all the above parties play by the book.
Finally, invest in stable money market funds sponsored by a financially strong company. This article shows you how to choose a stable Kenyan MMF to invest with.
Look at the financial strength of the company that owns the money market fund. Preferably, choose MMFs where the parent company is big. For example, it is owned by a multinational or a big local financial institution.
Large firms will normally take on any unforeseen losses to protect their reputation rather than passing such losses to their unitholders.
Yes. The Fund Manager will deduct 15% of the interest earned. Therefore, only 85% of the interest earned is credited to your money market fund account.
However, the 15% withholding tax is final and that income is not taxed again.
When it comes to money market vs sacco, there are a number of factors to consider.
In Money Market Funds, you can access your money anytime you want. However, in a Sacco, you have to first resign as a member. Secondly, wait for the stipulated time to get your deposits. Similarly, you have to find a member willing to purchase your Sacco shares.
Further, your money is automatically COMPOUNDED every month in Money Market Funds. In contrast, Saccos in Kenya pay a weighted interest on your deposits with no automatic compounding.
Finally, MMFs are earning higher if not similar interest to Sacco deposits. For example, my Sacco pays 8.25% whereas CIC Money Market Fund is paying 9.0%.
However, Saccos are excellent for those who want quick and cheap loans. For example, my Sacco offers loans of up to 4 times the deposits at 12% reducing balance.
See below why you should use your MMF deposits as security for your Sacco loan 🙂
Investing directly in a Treasury bill or a Treasury bond is great. This is because you bypass the intermediary and thus don’t pay management fees.
However, there are a few hurdles to overcome. Firstly, you need ready capital of *Kes 100,000 to start investing with Treasury Bills and Bonds. Further, any incremental investments are in minimums of Kes 50,000.
However, most ordinary Kenyans don’t have access to such capital. Therefore, unit trusts are appropriate as they allow the small investor with Kes 2,500 to access the bond market.
Secondly, you also lack the advantage of liquidity i.e. You have to wait until the Treasury bill or bond matures. However, with Money Market Funds your money is accessible anytime.
Finally, most people don’t have the time to go to CBK , submit their bid and participate in the auction. Therefore, they prefer to invest in unit trusts and save themselves the hustle.
In conclusion, investing directly gets you a higher return but at the price of no liquidity, time expenditure and high capital needs. If that is a price you can afford then direct investment makes sense.
*M-Akiba is helping ordinary Kenyans to invest in lower amounts. The starting capital is Kshs 3,000 with incremental investments of Kshs 500 per day.
No. You need to always be an INFORMED investor. Join my various forums below to keep up to date with money market funds and other asset classes in Kenya.
Further, read the ultimate guide on money market funds in Kenya.
Finally, subscribe and view the free video tutorials on how money market funds work. After that, you will become an informed investor in MMFs.
Otherwise, if you want, here is my pick of the best money market funds in Kenya and how to get started:
No. KCB money market fund is yet to exist. Currently KCB doesn’t have a money market fund registered with the Capital Markets Authority of Kenya (CMA).
If you didn’t find an answer to your question on how Money Market Funds work in Kenya:
- leave a comment with your question
- best way to formulate the question is to ask yourself how would I Google it? What specific search phrase would you use?
- For example, someone who wants to know how the interest of MMFs is calculated in Kenya would search for “How is the interest of Money Market Funds in Kenya calculated?” and so on.
- I will then update this post with your question and a detailed answer. That way the post will help other Kenyans who may have a similar query in the future.
- EXACT steps to access Hustler Fund – with screenshots for each step!
- Apply for Hustler Fund Loan via USSD
Top Money Market Funds in Kenya
Below is a summary of the top money market funds in Kenya 2022 financial year.
Learn about the New MPESA charges for sending or receiving money via phone, ATM or MPESA agent.
The guide includes a curated list of transactions that are FREE via MPESA!
You can find more tips including the free Money Market Fund Bot in one of the best Kenyan Telegram Channels on Personal Finance.
The Telegram Personal Finance Group is the tribe you have been looking for!
Hope you found this article helpful and got some valuable insights.
Other Valuable Guides
Here are links to other valuable content on this blog:
- Rule of 72: Expertly Know When Your Money Doubles in Value
- Here is the link to the Free Personal Finance Lessons for Kenyans. The first 10 free lessons are ready for your learning!
- Below are some short and sweet personal finance and investing lessons. Watch. Learn. Enjoy. Share.
Otherwise, you can buy it from Jumia Kenya and have it delivered to your door!
Step by step guidance to easily view and download your TSC Payslips online
How do I transfer money directly from my bank account to my CIC money market fund account?
See this section with step by step guidance on depositing money from your bank account to the CIC MMF.
I want to start investing how can we communicate with you
Hi Rahab,
You can send me an email on nashthuo@gmail.com or send me a WhatsApp on +254724823266
Very insightful and informative. Now I know the A, BC of MMF.
Could you also be kind to share on other Unit Trusts? Thanks.
Good one
Good read, informative but think since this was an educational item and not a pr venture you should have done a comparison of the other mmf in the market.
While the two mentioned mmf are the best at the moment, don’t the others make money for there investors (unit holders) and if they do how much.
Take it a step future, interview the fund managers for there opinions, very interested. Good job at sharing this info, maybe work on putting up the daily yield on your website – good for historical comparison.
Agreed. I plan to do exactly what you suggest. The education is in phases. The first articles are aimed at helping someone new to Money Market Funds get started hence focus on the best funds.
Kind Regards,
Quite helpful. Thanks.
That was great Nash
Very insightful info. Awesome
Thank you for this article,if you don’t mind share it on dngari09@gmail.com