More Kenyans ditch money market funds for higher-yielding special schemes

Money market Funds at risk of declining as special funds and fixed income gain market share. [ Courtesy]

Discerning Kenyan investors are fundamentally reshaping the country’s collective investment landscape, pivoting away from traditional money market funds toward special funds and fixed income products as they hunt for higher yields in a tough economic environment.

This is according to the Capital Markets Authority’s (CMA) latest quarterly report. Total Assets Under Management (AUM) in Collective Investment Schemes (CIS) reached a record Sh851.7 billion as at March 2026, up from Sh756.3 billion in December 2025. The sector has grown by 1,404 per cent from just Sh56.6 billion in March 2018.

Investor participation has also surged in tandem, with the number of CIS investors climbing 45 per cent over the past year to 3.63 million.

But beneath the headline growth lies a dramatic redistribution of capital, the CMA data shows.

Money market funds (MMFs) remain the most popular entry point for retail investors, but their dominance is eroding rapidly. MMFs accounted for Sh442.2 billion (52 per cent) of total AUM in the first quarter of 2026. That figure, while still commanding, masks a marked decline from 2021 when MMFs held over 90 per cent of all CIS assets.

The trend reflects a maturing investor base, says the capital markets regulator. “The growth of fixed-income funds hit double digits post-December 2021, reducing the dominance of money market funds from 90 per cent in December 2021 to 56 per cent in December 2025,” the CMA noted in its Q4 2025 report.

The top 10 money market funds by AUM are Sanlam Money Market Fund, holding Sh114.16 billion or 27.1 per cent market share. CIC Money Market Fund follows with Sh78.93 billion (18.7 per cent), with Absa Shilling Money Market Fund holding Sh26.18 billion (6.2 per cent). Old Mutual Money Market Fund held Sh24.28 billion (5.7 per cent market share) while Co-operative Money Market Fund held Sh21.61 billion (5.1 per cent).

Others are NCBA Money Market Fund- Sh19.42 billion (4.6 per cent), KCB Money Market Fund-Sh17.85 billion (4.2 per cent), Equity Money Market Fund- Sh15.63 billion (3.7 per cent) and Britam Money Market Fund – Sh13.94 billion (3.3 per cent). Madison Money Market Fund held Sh11.27 billion (2.7 per cent).

The most striking shift is the explosive growth of special funds, which have surged to Sh203.6 billion, capturing 23.9 per cent of the entire CIS market. This represents a dramatic climb from a paltry six per cent in the first quarter of 2021.

Special funds offer broader investment mandates than traditional funds, allowing managers to deploy capital across unlisted equities, private debt, offshore stocks, commodities, real estate investment trusts (REITs), and derivatives.

This flexibility, investors and CMA reckon, enables higher yields that increasingly attract high-net-worth individuals and corporate treasuries seeking to outpace inflation and hedge against currency depreciation.

The top ten special funds by AUM are Mansa-X Special Fund, which held Sh153.20 billion (73.5 per cent market share within Special CIS) and Oak Multi Asset Special Fund, holding Sh12.47 billion, representing 6.1 per cent of the market share.

Madison Wealth Special Fund held Sh8.92 billion (4.4 per cent), Absa Special Fund – Sh7.34 billion (3.6 per cent), while CIC Special Fund held Sh5.68 billion (2.8 per cent).

NCBA Special Fund held Sh4.21 billion (2.1 per cent), KCB Special Fund held Sh3.95 billion (1.9 per cent), while Old Mutual Special Fund had Sh3.12 billion (1.5 per cent). Equity Special Fund stood at Sh2.76 billion (1.4 per cent), while Sanlam Special Fund held Sh1.95 billion (1.0 per cent).

Since its inception in 2018, Mansa-X says it has delivered an average annual return of 18.37 per cent, according to CMA data. The fund ranks as the best-performing special fund, followed by Oak Multi Asset and Madison Wealth Fund.

Fixed Income Funds, catering to investors seeking moderate risk and predictable income, have also gained ground. They now hold Sh199 billion, representing 23.4 per cent of total AUM.

These funds invest primarily in government and corporate bonds, offering steady returns that appeal to risk-averse savers willing to accept slightly longer durations for better yields.

Sanlam Fixed Income Fund leads the fixed income segment with Sh31.24 billion in assets under management, representing 15.7 per cent of the market share within the fixed income category.

CIC Fixed Income Fund follows closely in second position with Sh28.76 billion, capturing 14.5 per cent of the fixed income market.

Absa Fixed Income Fund ranks third with Sh24.18 billion in AUM, accounting for 12.2 per cent of the segment.

Old Mutual Fixed Income Fund holds fourth place with Sh21.93 billion, representing 11.0 per cent market share. Co-operative Fixed Income Fund secures the fifth position with Sh19.47 billion, claiming 9.8 per cent of the fixed income market. NCBA Fixed Income Fund comes in sixth with Sh17.82 billion, translating to a nine per cent market share.

 KCB Fixed Income Fund ranks seventh with Sh15.64 billion, representing 7.9 per cent of the segment.

 Equity Fixed Income Fund takes eighth position with Sh13.91 billion, accounting for a 7.0 per cent market share.

Britam Fixed Income Fund holds ninth place with Sh12.58 billion, capturing 6.3 per cent of the fixed income market. Madison Fixed Income Fund rounds out the top ten with Sh9.87 billion, representing a five per cent market share.

Interestingly, Equity Funds and Balanced Funds, the segments most directly aligned with long-term capital growth and portfolio diversification, remain almost entirely overlooked. As of March 2026, they accounted for just 0.6 per cent and 0.3 per cent of total CIS AUM, respectively.

Old Mutual Equity Fund leads the equity segment with Sh2.14 billion in assets under management, representing a commanding 42.0 per cent market share within the equity CIS category.

Absa Equity Fund secures the second position with Sh1.18 billion in AUM, accounting for 23.2 per cent of the equity market. Sanlam Equity Fund ranks third with Sh0.96 billion, capturing 18.8 per cent of the equity segment.

CIC Equity Fund holds fourth place with Sh0.52 billion, representing 10.2 per cent market share within equity CIS. KCB Equity Fund rounds out the top five with Sh0.29 billion, claiming 5.7 per cent of the equity market.

The under allocation is not without explanation. Kenya’s equity cycles have been exceptionally volatile, losses exceeding 20 per cent in 2023 were followed by strong rebounds in 2024 and 2025, a profile that has historically deterred mass retail investors.

Many stocks listed on the Nairobi Securities Exchange remain net losers over the last decade. With money market funds offering double-digit yields and daily liquidity, the risk-return trade-off of equity funds has often been unconvincing on a net basis.

The data paints a portrait of a resilient, increasingly sophisticated investor base diversifying across asset classes despite a challenging economic backdrop. Inflation hit a two-year high of 6.7 per cent in May before moderating to 6.4 per cent in June, while the Central Bank maintained its rate at 8.75 per cent throughout the quarter.

“The shift reflected a fast-changing and volatile market where investors are becoming more informed and willing to diversify their portfolios,” the CMA observed.

The regulator noted that MMFs are expected to remain a key entry point for many Kenyans beginning their investment journey due to their simplicity and accessibility, even as competition intensifies.

With 62 approved schemes, 285 funds, and a regulatory framework that now accommodates everything from money market funds to multi-asset special funds, Kenya’s collective investment industry is evolving from a one-dimensional savings vehicle into a genuine capital market for a diversifying nation of investors, CMA said.