Money market funds are emerging as one of Kenya’s most talked-about investments. From managing rainy-day savings to funding business or institutional cash reserves, Money market funds, or simply MMFs, offer a low-risk, highly liquid alternative to traditional bank accounts. But what’s fuelling their surging popularity in lately?
This piece breaks down the economic and social forces driving Kenyans — from beginners to to established investors — to opt for money market funds.
Money market funds are pooled investment funds managed by licensed firms that invest in short-term, high-quality assets such as Treasury bills, bank deposits, and commercial paper. They offer capital preservation, modest yields higher than bank savings rates, daily liquidity, and minimal entry barriers — some accept as little as Ksh 100.
Regulated by the Capital Markets Authority (CMA), MMFs are subject to governance safeguards including oversight by fund managers, trustees, and custodians. By the end of the first quarter of 2025, Kenya had 49 licensed MMFs managing a combined Ksh 319.7 billion — or about 64% of all collective investment scheme assets in the country.
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Assets under management have more than quadrupled since 2019, rising from around Ksh 66 billion to over Ksh 215 billion by December 2023 — and trending high into 2025 . MMFs now dominate Kenya’s fund landscape, reflecting both investor demand and regulatory support.
MMFs popularity growing due to a number of reasons, including:
1. Rising Interest Rates & Attractive Yields
Kenya’s elevated interest rate environment, driven by the Central Bank of Kenya (CBK) policy stance, has increased yields on Treasury bills and other short-term government debt. Since MMFs invest heavily in these instruments, their returns have risen in parallel .
Top MMFs offered gross annual yields between 14–16% in late 2024 and early 2025, with net returns (after fees and 15% withholding tax) running around 9–13%, significantly above the inflation rate (around 4–6%) .
2. Ease of Access & Liquidity
Platforms such as MMF apps and integration with M‑PESA allow investors to deposit or withdraw funds quickly, often within the same or next day. Digital onboarding and mobile-first access suit Kenya’s tech-savvy, youthful demographic, enabling investment with minimal paperwork and low minimums like Ksh 100. A good example is Safaricom’s Ziidi Fund, where onboarding and investing is done through the app.
3. Growing Financial Awareness
Kenyans are becoming more financially literate and are seeking alternatives to low-yielding bank savings accounts and informal chamas. MMFs offer a transparent, regulated solution attracting new retail investors .
4. Low Risk in an Uncertain Environment
With MMFs heavily invested in government-backed or high-grade short-term securities, they afford low volatility just when macroeconomic and geopolitical uncertainties loom large. In contrast to SACCOs or equities and startup investing, MMFs have predictable returns, and unlimited access — making them ideal for risk-averse savers and emergency funds.
5. Key Players & Market Leaders
As of Q1 2025, the leading MMFs in Kenya include CIC Money Market Fund (25.6% share) and Sanlam Money Market Fund (22.6%), with other major players like ICEA Lion and Absa each holding around 6% of the market. Monthly rankings of top performers often feature GulfCap, Cytonn, and Kuza funds — with gross returns in the 13–16% range and net yields above 11% — even after taxes and fees .
Risks & Criticisms
Despite their appeal, MMFs are not risk-free. Their return profiles are tied to interest rates, which may dip if the CBK cuts rates. Indeed, yields declined modestly in mid‑2025 when CBR was lowered to around 10%, dragging MMF gross returns from over 14% to closer to 13% and reducing net returns to around 9–10%.
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Fees and withholding tax further eat into returns, meaning real returns can be slim once inflation, taxes, and charges are considered . Still, for short-term savings and emergency cash, MMFs often outperform traditional bank deposits.
Higher returns, easy access
For the average Kenyan with spare cash sitting idle in a bank account earning 3–7%, MMFs present a compelling alternative — higher returns, easy access, and low entry barriers. For example, with just Ksh 100 invested digitally, you can earn daily interest without visiting a bank or Sacco.
Institutions, businesses, and NGOs also park operational reserves in MMFs thanks to same‑day liquidity and regulatory oversight by CMA . Still, financial advisors suggest a balanced approach — setting aside an emergency base in MMFs before exploring longer-term options like T‑bills, bonds, or diversified funds.
Preserving Capital
Money market funds have quickly become a staple of Kenya’s financial landscape — delivering access, liquidity, transparency, and returns that outpace inflation and savings accounts. Their rapid growth in 2025 reflects macroeconomic tailwinds, evolving investor preferences, and digital innovation. While yields may moderate if interest rates decline, MMFs remain a practical choice for preserving capital in the short term. For many Kenyans, they are no longer just “investment funds”— they’re convenient, everyday tools for managing money wisely.
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