Kenya’s retail funds pivot to riskier assets
Kenyan investors are abandoning money market funds for higher-yielding special funds, tying domestic savings to global capital markets and raising regulatory concerns.
Kenyan retail and affluent investors are pulling capital from money market funds and redirecting it into higher-risk special funds, fundamentally altering the country's investment landscape. By March 2026, money market funds had seen their share of collective investment scheme assets plummet from over 90% in 2021 to just 51.9%, according to Capital Markets Authority data. Over the same period, special funds surged from a marginal 6% to a record 23.9% of the market.
The rotation is driven by falling government borrowing costs. As Kenya's Treasury pushes bill rates lower to reduce its financing burden, money market fund yields have compressed into single digits, struggling to outpace inflation against a backdrop where bank savings accounts yield just 3–4%. Seeking better returns, investors have turned to special funds, which reported net annual yields of 18–29% in recent periods. Flagship products like Standard Investment Bank’s Mansa X and the Kuza Momentum fund returned over 20% in 2025.
These special funds operate under broader mandates than traditional money market products. Managers can allocate capital to domestic and offshore equities, corporate bonds, commodities, and derivatives. This flexibility channels Kenyan household savings directly into foreign markets, with portfolios tracking the S&P 500, global technology stocks, and gold.
The products carry significant barriers and costs. Minimum investments range from KSh 100,000 to KSh 500,000, and many funds impose lock-in periods of six to twelve months. Annual management fees run between 2% and 6%, plus performance fees, making them better suited for affluent individuals and institutions with longer time horizons. Nevertheless, a younger demographic—investors under 40—represents the fastest-growing segment, accessing these products through mobile-first platforms built on Safaricom’s M-Pesa network.
This migration of capital is shifting the balance of financial power in Kenya. Investment banks and wealth managers like Ndovu Wealth and Oak Capital now control pools of capital that rival traditional bank deposits. Foreign institutions, including Absa, Standard Bank, and Access Bank, are also shaping product design by importing Basel standards and structured investment frameworks.
However, the trend introduces systemic vulnerabilities. A sharp correction in US technology stocks or commodity prices would transmit shocks directly to Kenyan retail investors accustomed to the capital preservation of money market funds. The Capital Markets Authority and the Central Bank of Kenya may soon need to address suitability and disclosure frameworks, particularly regarding the marketing of complex derivatives and illiquid alternative assets.
