The 4 Biggest Money Market Funds in KenyaPosted on 2018-02-19
Kenya is East Africa’s biggest economic and technological hub with vast developments in transport and infrastructure.
Kenya’s real GDP growth has averaged over 5% for the last seven years and since it has been ranked as a lower middle income country because its per capita GDP crossed a World Bank threshold, the Gross National Income (GNI) per Capita of USD 1,036
Kenyans are serious about business and that’s why they are always seeking opportunities to grow and diversify their wealth. After the interest rate capping in 2017, banks have become more stringent on savings accounts, reclassifying most bank accounts as non saving accounts and therefore paying no interest on bank balances. This has forced many Kenyans to look for alternate ways to generate returns on their savings.
One of the ways they do this is through money market funds offered and controlled by various institutions. They include the likes of BRITAM insurance, CBA bank, Old Mutual, Madison, ICEA Lion, Amana and many more.
What is a money market fund?
Also referred to as a mutual fund, it is a professionally managed investment fund in which investors’ contributions are pooled together to purchase financial securities, such as equities (shares), bonds, cash, bank deposits etc.
In Kenya, Money Market funds are regulated by Capital Markets Authority (CMA).
- Increased diversification: A fund normally holds many financial securities; diversification decreases risk.
- Daily liquidity: Unit holders can buy and sell their units on a daily basis
- Professional investment management: unit trust funds hire portfolio managers to supervise the fund's investments.
- Ability to participate in investments that may be available only to larger investors. For example, individual investors often find it difficult to invest directly in foreign markets.
- Government oversight: Unit trust funds are regulated by CMA
- Ease of comparison: All mutual funds are required to report the same information to investors, which makes them easy to compare.
Now with that information, you might want to join one but what is the process and considering they are quite a number, how do you get the best yields for your money. Let’s dig deeper and find out:
Old Mutual Market Fund
Run and managed by old of the oldest financial institutions Old Mutual, it’s focused on generating total return through investing in a range of debt securities, fixed deposit instruments and near cash in the Kenyan market, while providing conservative risk exposure for investors. Old Mutual merged with UAP in Kenya to create one of the power houses in financial services in Kenya ranging from insurance, asset management, real estate, banking, microfinance and more.
Its portfolio ranges from;
- Securities issued by the government of Kenya - up to 80%
- Securities listed on a stock exchange in Kenya - up to 80%
- Off-shore deposits - up to 10% (this includes debt securities held in Dollar, Euro or Pound currencies)
- Near cash deposits - up to 10%
The price of the Old Mutual Money Market Fund is KShs 1 and remains static with yields changing daily but deposited in the investors account every month. The minimum lump sum one can invest in this fund is Ksh 1,000.
CIC Money Market Fund
This one is run by CIC group which prides itself in having over 30 years’ experience in insurance and financial services. With a total of 3,878 shareholders and a capital base of Ksh 2.1 billion and 1.3 Million clients, the group has a quite a big footing in the Insurance industry. CIC Insurance is one of the largest general and life insurance companies in the region spanning all the way from Kenya, Uganda, South Sudan, Malawi and more.
In 2012 the group won The Annual Insurance Claims Settlement Award for consistently paying claims on time and was also recently listed at the Nairobi Securities Exchange (NSE).
Their market fund, just like many others is focused on investments in high quality interest bearing investments, fixed deposits, and near cash holdings in the Kenyan Market.
Their fees are as follows-
- Minimum investment amount is Kshs. 5,000. Minimum additional amount is Kshs. 1,000.
- No initial fees are charged on the Money Market fund
- Access to your money is when required with a short notice of 2 – 4 working days.
- Monthly statement is sent.
BRITAM Money Market Fund
Britam is a leading diversified financial services group, listed on the Nairobi Securities Exchange. The group has interests across the Eastern and Southern Africa region, with operations in Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique and Malawi. The company offers a wide range of financial products and services in Insurance, Asset management, Banking and Property. BRITAM Insurance is a leading general, medical and life in the region, listed on the Nairobi Stock Exchange.
And just like its counterparts in the financial services field, they also run a money market fund with no initial fee but a management fee of 2.5% p.a. They have also gone the extra mile of making the fund available on mobile by only dialing *778#
CBA Money Market Fund
Commercial Bank of Africa Ltd (CBA) is the largest privately owned bank in East Africa and has been operating for over 50 years. CBA was founded in Tanzania and branches were set up in Kenya and Uganda shortly thereafter.
CBA began as a subsidiary of Societe Financiere pour les pays D’Outre Mer (SFOM), a Swiss-based consortium bank. Other consortium members included Bank of America, Dresdnen Bank (now Commerzbank), Bank Bruxelles Lambert and Banque National de Paris.
In 1980, Bank of America bought out all of SFOM’s partners and restructured CBA to mirror their own systems and disciplines before selling its majority shares to local investors.
CBA has since developed a reputation as the go-to provider for large corporations, institutions, diplomatic missions, NGOs and high net-worth private clients. In that regard they have set up a money market fund to cater for this clientele.
And here are some of its features:
- No joining fee.
- Interest is calculated on a daily basis, and credited to the client's account monthly.
- Option of reinvested into the fund to maximize investments returns through compounded growth.
- The minimum investment for each of our unit Trusts Funds is KShs 5,000.
- The minimum additional investment amount is KShs 5,000.
- Service fee of 2% p.a.
Now instead of having your money lying around in a savings account, a money market fund a new avenue to invest your hard earned money.
You can also visit the various institutions to understand more about the whole process of joining them.