The average net-of-fees return on Kenya’s money market funds (MMFs) fell to 9.3 per cent as of October 15, down from 9.9 per cent at the same time last year.

Tracking 26 MMFs, 20 recorded lower annualised returns while six – African Alliance Kenya, Faulu, Genghis, KCB, Madison and Sanlam Allianz – posted increases, and the number of funds delivering double-digit returns dropped to 13 from 14.

The yield decline mirrors falling domestic rates, with the one-year Treasury bill rate slipping to 9.03 per cent from 9.39 per cent in mid-October 2025, and commercial-bank fixed-deposit returns falling to 6.91 per cent in August from 7.5 per cent a year earlier.

Special funds expanded their share of total collective-investment-scheme assets to 26.6 per cent in the quarter ended June 2026, up from 23.9 per cent in March, while MMFs’ share fell to 48.5 per cent from 51.9 per cent.

Asset growth in special funds accelerated to 24 per cent in the quarter, far outpacing the 4 per cent rise recorded by MMFs, as the market’s total assets reached KSh948.7 billion and served more than 4.1 million investors.

Linus Kang’ara, chief executive officer of Capital A Investment Bank, said the growth of special funds “is purely driven by investors chasing returns. Kenyans are synonymous with chasing higher yields,” and added that “the demand we are getting from Kenyans is that they are looking for more opportunities and would want to diversify their investments within special funds, so that they are not just holding all their assets in just one special fund.”

Fund managers have responded by launching new products, including Britam Asset Managers’ global-equity and multi-asset special funds, Absa’s approval for global multi-asset funds denominated in Kenyan shillings and US dollars, and Lofty-Corban Investments’ private-debt-focused special fund introduced in February 2026.

The Capital Markets Authority is considering a framework for rating collective-investment schemes and their managers, focusing on asset quality, liquidity, volatility, foreign-currency exposure and governance.

MMFs primarily hold short-term government securities and bank deposits, making them suitable for investors prioritising liquidity and low risk, whereas special funds can invest across equities, offshore securities and private debt, exposing investors to higher return potential and greater market, credit and currency risks.