Over recent years, Kenyans have shown increasing enthusiasm for money market funds (MMFs). Personal finance experts continue to tout MMFs as one of the most reliable investment options due to their low-risk nature and flexibility.
The surge in popularity has seen dozens of fund managers open their doors to local investors, with some platforms allowing investments as low as Sh 100. Zidii, a platform backed by Safaricom, has become one of the most notable new entrants. Today, nearly all major banks, insurance companies, and investment firms are also licensed fund managers.
MMFs have gained favour as ideal vehicles for emergency funds. This is thanks to their liquidity, many funds allow investors to access their money immediately or within 72 hours, a stark contrast to the 60-day notice period required by most SACCOs.
In 2024 and earlier, most fund managers were offering attractive returns, some ranging between 15% and 20% annually. Many consistently gave investors between 12% and 15%. However, this trend seems to have shifted. Currently, most MMFs are offering annual returns of between 8% and 10%.
To understand the cause of this shift, Bizna Kenya spoke with personal finance expert Margaret Njeri. She explained that the fluctuations in returns are nothing new, as MMF rates are heavily influenced by broader market conditions.
MMF is paying me Sh2,800 per month after investing Sh500,000
“First, you need to understand how fund managers make money after taking your deposits. They invest heavily in treasury bills and fixed deposit accounts in banks. The interest earned from these investments is what they use to pay investors,” Njeri started.
Just a year ago, in May 2024, the interest rates for treasury bills were high: the 91-day T-bill stood at 15.865%, the 182-day T-bill at 16.488%, and the 364-day T-bill at 16.495%. Fast forward to May 2025, the numbers have dropped sharply: 91-day T-bill at 8.4%, 182-day at 8.6%, and 364-day at 10.0%.
This decline mirrors the drop in the Central Bank Rate (CBR), which has fallen from 13% in May 2024 to the current 10%. As a result, banks are now offering lower returns compared to last year.
List of Money Market Funds in Kenya, the cash they hold, and market share
Njeri acknowledges that the lower MMF returns may be discouraging to some investors but urges calm. She remains optimistic, saying the dip does not spell doom for MMFs.
Instead, she advises investors to diversify their portfolios. In addition to MMFs, she recommends considering options like company shares, SACCO deposits, and direct investments in treasury bills and bonds.
“Use MMFs as your emergency fund or a short-term savings account for upcoming projects. MMFs are still a much better option than leaving your money idle in your current account. The other good thing about MMFs is that they have a compounding effect; you earn interest on interest. You also need to understand that in the market of money, the more you invest, the better the returns. Compounding rewards you in a better way when you invest more and more,” she explained.
She also warned Kenyans to be cautious of fund managers promising sky-high returns of 25% or 30%, saying these are often tied to high-risk ventures.
“We do have avenues offering higher returns, like Mansa X. They don’t rely heavily on local treasury bills like most MMFs. Instead, they invest in offshore stocks and other vehicles. But it’s not easy to get in unless you have deep pockets. The minimum investment is Sh 250,000, with a minimum top-up of Sh 100,000. Their projected annual return this year is about 19%,” she explained.
