Top 20 Best Money Market Funds In Kenya For 2024: Everything To Know

In the financial landscape of Kenya, the charm of money market funds (MMFs) has grown remarkably, especially as we step into 2024. These funds have become a hope for investors, ranging from individuals seeking a haven for their hard-earned savings to corporations eyeing stable yet fruitful investment avenues. But what exactly are these money market funds, and why have they become such a cornerstone in the Kenyan financial environment?

At their core, MMFs are investment vehicles that offer both the flexibility of a savings account and the higher yield of an investment fund. They are designed to provide a safe platform for managing short-term liquidity needs while also offering the potential for higher returns compared to traditional savings accounts. What makes them particularly attractive in the Kenyan context is their ability to blend security with profitability, a combination that's highly sought after in the face of fluctuating economic conditions. These funds typically invest in short-term debt securities, including treasury bills and commercial paper, making them an appealing option for risk-averse investors who are still looking for reasonable returns.

The intrigue surrounding MMFs in Kenya goes beyond just their investment structure. These funds have become an integral part of the financial planning landscape for many Kenyans, aiding in achieving various financial goals such as building emergency funds, planning for education, preparing for significant life events like weddings, or even larger projects like home purchases. The versatility of MMFs in meeting diverse financial needs while offering the comfort of liquidity and lower risk profiles makes them a standout choice for a broad spectrum of investors.

As we delve deeper into the top 20 money market funds in Kenya for 2024, it's crucial to understand not just the mechanics of these funds but also the rationale behind their growing popularity. In a world where financial security and growth are paramount, MMFs in Kenya present a compelling case for both seasoned and novice investors alike. 

READ ALSO: List of All Gazetted Public Holidays in Kenya For 2024 (From New Year's Day to Jamhuri Day)

Understanding Money Market Funds in Kenya

In Kenya, Money Market Funds (MMFs) have carved out a niche as a pragmatic and reliable investment choice, especially for those aiming to balance risk and return efficiently. Let's dive into the essentials of MMFs and examine why they have become a go-to financial tool for many Kenyans.

Definition and Nature of Money Market Funds

MMFs are a type of mutual fund that specializes in investing in short-term debt securities. These securities include treasury bills, commercial paper, and certificates of deposit. The primary aim of MMFs is to provide investors with a safe place to invest easily accessible, liquid cash equivalents while earning a return that typically exceeds traditional savings accounts. In Kenya, MMFs have emerged as popular due to their higher yield potential and low-risk profile, which is particularly appealing in the fluctuating economic environment​​​.

What sets MMFs apart in the Kenyan market is their focus on capital preservation and liquidity. They are designed to maintain a stable net asset value (NAV), usually at Ksh 100 per share, making them a less volatile investment option compared to stocks or long-term bond funds. This stability is crucial for investors who need quick access to their funds or who are risk-averse.

Why Choose MMFs? Benefits and Risks

1. Benefits:

• Higher Yield than Traditional Savings: MMFs in Kenya offer competitive interest rates, typically ranging from 7% to 11%, which is significantly higher than the average savings account interest rates. For example, the Cytonn Money Market Fund reported an effective annual rate of 10.8%​​.
• Liquidity: MMFs provide the flexibility of withdrawing funds without significant penalties, making them ideal for emergency funds or short-term financial goals​​​​.
• Diversification: By investing in a variety of short-term debt instruments, MMFs reduce the risk associated with investing in a single security.
• Professional Management: Investors benefit from the expertise of professional fund managers who are adept at navigating the complexities of the financial markets.

2. Risks:

• Interest Rate Risk: MMFs are susceptible to fluctuations in interest rates, which can impact the fund’s yield.
• Credit Risk: There's a risk associated with the default of securities within the fund's portfolio, although this is mitigated through careful selection of high-quality instruments.
• Inflation Risk: In high inflation scenarios, the real return (interest rate minus inflation rate) of MMFs can be lower, impacting the purchasing power of the investment returns.

Understanding these aspects of MMFs is crucial for any investor looking to delve into this market. The blend of higher potential returns, liquidity, and lower risk makes MMFs an attractive option for Kenyans seeking to optimize their investment portfolios. However, like any investment, it's essential to weigh these benefits against potential risks and individual financial goals.

READ ALSO: Cement Prices in Kenya 2024: Comprehensive Brand Analysis, Manufacturing Costs

Top 20 Money Market Funds - Detailed Analysis

1. Cytonn Money Market Fund

The Cytonn Money Market Fund is renowned for its high yield and accessibility. It offers a competitive edge with an effective annual rate of 10.8%​​. This fund is tailored to investors seeking higher returns with manageable risk levels. As of the writing of the article, the Cytonn Money Market Fund delivered a daily yield of 10.01%, translating into an effective annual rate of 10.53%​​. These numbers indicate a strong performance, especially in comparison to traditional savings options. The fund is known for its user-friendly investment process, allowing investors to manage their investments through digital platforms conveniently.

2. Apollo Money Market Fund

Managed by APA Insurance, the Apollo Money Market Fund focuses on diversifying risk by investing in a variety of options like treasury bills, corporate notes, and deposits​​. It allows a minimum investment of Ksh 1,000. It has been known to offer an interest rate of around 9.4%, with an annual management fee of up to 2%​​. This positions it as a competitive choice for both small and large investors.

3.GenCap Hela Imara Money Market Fund

This fund stands out for its strategic investment in a diversified portfolio, aiming to maximize returns while maintaining liquidity. The fund reported an effective annual yield of 10.1%, showcasing its strong performance in the market. It is designed for investors looking for a blend of safety, liquidity, and competitive returns.

4. Zimele Money Market Fund

Zimele offers an accessible entry point with a minimum deposit requirement of Ksh 100 and the convenience of M-Pesa for transactions​​. With competitive interest rates and a focus on the safety of funds, Zimele recorded a 9.9% average return, appealing to investors seeking stable and reliable growth​​.

5. NCBA Money Market Fund

The NCBA Money Market Fund offers a well-balanced risk profile, making it a suitable option for conservative investors. It has demonstrated consistent performance with an average return of 9.9%​​. The fund's strategy involves investing in high-quality, short-term debt instruments, ensuring both capital preservation and liquidity.

6. Sanlam Money Market Fund

The Sanlam Money Market Fund is designed for both individual and corporate investors. It is ideal for short-term investments ranging from 1 to 12 months. It offers an accessible entry point with a minimum investment of Ksh 2,500. The fund is known for its low-risk profile, rated between 0-1.6 on Sanlam's scale. It invests in high-quality interest-bearing assets, fixed deposits, and near-cash holdings in the Kenyan market. The compounded interest is calculated daily and distributed monthly, providing a steady return on investment.

7. Kuza Money Market Fund

The Kuza Money Market Fund is structured to offer high liquidity, enabling investors to access their funds with minimal restrictions. With a focus on security, the fund invests primarily in secure and short-term debt instruments. The fund reported an annual yield of 9.8%, positioning it as a competitive option for investors seeking both safety and profitability​.

8. Nabo Africa Money Market Fund

Nabo Africa Money Market Fund is known for its higher minimum investment requirement of Ksh. 1,000,000, catering to investors with larger capital outlays. It aims to maximize current income by investing in a diversified portfolio of short-term debt securities and instruments. The fund emphasizes capital preservation and maintaining high liquidity, making it an attractive option for high-net-worth individuals and institutional investors.

9. Old Mutual Money Market Fund

Old Mutual's Money Market Fund is notable for its stability and credibility despite a relatively high annual management fee of up to 3.37%. It offers a diverse investment portfolio, including treasury bills, corporate notes, and deposits. With an annual yield of 9.7%, the fund provides reliable liquidity and a cushion against inflation, making it a suitable choice for long-term investors​.

10. Dry Associates Money Market Fund

Managed by Dry Associates Investment Bank, this fund offers a unique blend of investment options. It focuses on delivering consistent returns with a 9.1% interest rate and maintains a portfolio of Ksh. 2.84 billion. The fund's strategy involves investing in diversified equities and fixed-income securities, making it a versatile choice for investors seeking a balance of risk and return.

11. Madison Money Market Fund

The Madison Money Market Fund is designed for capital preservation and offering competitive returns above treasury bills. It invests in short-term debt securities, including treasury bills and commercial papers. Notably, it provides flexibility with no penalties on withdrawals, making it investor-friendly. The fund offers competitive yields, calculated at 2% above treasury bills, with an effective annual yield reported at 8.96%. This positions it as a lucrative option for those seeking steady and reliable investment growth.

12. Co-op Money Market Fund

The Co-op Money Market Fund offers a daily yield of 8.32% and an effective annual rate of 8.68%​​. This fund is tailored for individuals planning for short-term financial goals, like emergency funds, school fees, or land purchases. The fund calculates interest earnings daily and applies a withholding tax on the monthly income, ensuring transparency and ease of understanding for investors.

13. CIC Money Market Fund

The CIC Money Market Fund is characterized by its liquidity and flexibility. Investors can withdraw funds at short notice without penalty fees, making it ideal for those requiring quick access to their investments​​. Investing in government paper and liquid instruments, the fund offers competitive returns, with interest calculated daily and credited monthly. This approach ensures both security and profitability for investors​​.

14. ICEA Lion Money Market Fund

The ICEA Lion Money Market Fund is known for its focus on investment security. It invests in a mix of government and corporate debt instruments, ensuring a stable and secure investment platform. The fund has demonstrated consistent performance, offering an effective annual yield of 8.9%, which is competitive in the Kenyan MMF market​​.

15. British-American Money Market Fund

This fund is aimed at investors seeking a mix of safety, liquidity, and reasonable returns. It invests primarily in short-term government securities and high-grade corporate debt. With an effective annual yield of 8.9%, the British-American Money Market Fund offers a stable investment option for conservative investors looking for steady returns without significant risk​​.

16. Orient Kasha Money Market Fund

Orient Kasha Money Market Fund offers an annual yield of 8.6%, which is appealing to investors looking for a blend of modest returns and low risk​​. It is known for its diversified investment portfolio and solid risk management strategies. The fund focuses on maximizing investor returns while maintaining high liquidity, making it a suitable choice for investors with short-term financial goals.

17. Absa Shilling Money Market Fund

The Absa Shilling Money Market Fund is designed to offer investors a safe and liquid investment avenue. It mainly invests in high-quality short-term debt instruments. The fund has shown steady performance with an annual yield of 8.2%, making it a viable option for those seeking secure and consistent returns​​.

18. Equity Money Market Fund

Equity Bank's Money Market Fund is known for its robust portfolio, offering annual interest rates between 10 and 15%​​. This fund is ideal for investors looking for higher returns within the realm of money market funds. The fund's investment tools include a diverse mix of equities and fixed-income securities, catering to investors with a slightly higher risk appetite.

19. Etica Money Market Fund

Etica Money Market Fund, launched in 2021 by Etica Capital Ltd, is a notable new entrant in the Kenyan money market sphere. It has disrupted the market by offering high returns and targeting retail clients with smaller investments. As of September 2023, Etica recorded an impressive Effective Annual Yield Rate of 12.58%, the highest among Kenyan Money Market Funds at that time. This stellar performance showcases its potential as a highly rewarding investment option. The fund invests in a variety of instruments, including cash and cash equivalents, treasury bonds, bank deposits, and trade receivables, aiming to diversify and minimize risk while maximizing returns.

Etica is accessible with a minimum investment and top-up amount of only Ksh 100, making it extremely approachable for small-scale investors. The fund allows withdrawals within two business days and does not have a lock-in period, offering high liquidity.

20. Enwealth Money Market Fund

Managed by Enwealth Financial Services, it has shown impressive performance. As of July 2023, the Enwealth Money Market Fund was the best-performing MMF, with an average Effective Daily Yield of 11.43%. This fund has consistently delivered strong returns, making it an attractive option for investors seeking stable and competitive earnings from their investments.

READ ALSO: Top 10 Richest Women in Kenya In 2024, Sources of Wealth and Net Worth

FAQs About Money Market Funds in Kenya

What is a Money Market Fund?

• MMFs are investment vehicles that pool funds from investors to invest in low-risk, short-term debt securities like treasury bills and commercial paper.

How Safe Are Money Market Funds in Kenya?

• MMFs are generally considered low-risk investments. They invest in high-quality, short-term debt instruments, making them more stable compared to stocks or long-term bonds.

What Returns Can I Expect from MMFs in Kenya?

• Returns vary based on the fund's performance but typically range from 7% to 12%. For instance, Etica Money Market Fund recently reported an Effective Annual Yield Rate of 12.58%​​.

Can I Lose Money in a Money Market Fund?

• While MMFs are low-risk, they are not entirely risk-free. Factors like interest rate fluctuations and credit risk can impact returns.

How Do I Invest in a Money Market Fund in Kenya?

• Investing usually involves opening an account with the fund, completing an application form, and making an initial deposit. Minimum investment amounts vary by fund.

Can I Withdraw My Money Anytime from an MMF?

• MMFs offer high liquidity, allowing investors to withdraw their funds with minimal restrictions. However, withdrawal terms can vary between funds.

Concluding Thoughts

When selecting a money market fund in Kenya, consider the following:

• Investment Goals: Match the fund to your financial goals, whether it’s for emergency savings, education planning, or short-term income generation.
• Risk Tolerance: Assess your comfort level with risk. Even though MMFs are low-risk, they are not completely devoid of risk.
• Fund Performance: Look at the historical performance of the fund, but remember that past performance is not indicative of future results.
• Fees and Expenses: Understand any fees or charges associated with the investment, as these can affect your net returns.
• Fund Management: Consider the reputation and track record of the fund manager.

In summary, money market funds in Kenya offer a diverse range of investment opportunities, each with unique advantages and strategies tailored to different investor needs. From high liquidity and low-risk profiles to competitive returns and diversified investment options, these funds exemplify the variety and depth of the money market fund landscape in Kenya. Whether you are a novice investor or have a seasoned portfolio, there is a money market fund that can align with your investment objectives and risk tolerance.