Kenyans Shift Savings to Special Funds as MMF Yields Decline
Africa · East Africa
Key Facts
—Market share shift. Money market funds fell from over 90% of CIS assets in 2021 to 51.9% by March 2026.
—Special fund growth. Special funds now hold 23.9% of total CIS assets, up from 6% five years ago.
—Yield gap. MMFs return 8–11% annually while special funds target 18–25%, with some delivering 29%.
—Total assets. Kenya’s collective investment schemes reached KSh 851.7 billion ($6.6 billion) in AUM by early 2026.
—Investor profile. Minimums of KSh 100,000–500,000 ($770–$3,850) mean special funds largely serve affluent and institutional clients.
Kenyan retail and affluent investors are accelerating a historic rotation out of low-yield money market funds into higher-risk special funds regulators classify as collective investment schemes, reshaping the country’s domestic financial power structure and linking household savings more directly to global capital markets.
The great rebalance in Kenya’s unit trust market
Money market funds have dominated Kenya’s collective investment scheme landscape for a decade, holding over 90% of all CIS assets as recently as 2021. By March 2026, that share had tumbled to 51.9%, according to Capital Markets Authority data reported in Kenyan media.
Over the same period, special funds asset managers have launched surged from a marginal 6% of AUM to a record 23.9%. Total CIS assets reached KSh 851.7 billion ($6.6 billion), with special funds accounting for approximately KSh 162.4 billion ($1.25 billion).
The quarterly growth tells its own story. In the third quarter of 2025 alone, special funds expanded by 22%, the fastest pace of any fund category, while MMFs continued their relative decline.
One Nairobi-based analyst projects that special funds could become the most popular CIS category by late 2028 if current growth rates hold.
Why MMF yields are losing their appeal
The core driver is straightforward arithmetic. Kenyan money market funds typically deliver net annual returns of 8–11%, constrained by their allowable asset base of Treasury bills, bank fixed deposits and high-grade commercial paper.
As the government has pushed Treasury bill rates lower to ease its own financing costs, the ceiling on MMF yields has fallen into single digits for many products. With bank savings accounts still yielding just 3–4%, even MMF returns struggle to outpace Kenya’s cost-of-living increases.
Special funds, by contrast, published net annual returns of 18–29% in recent reporting periods. Flagship products like Mansa X from Standard Investment Bank and the Kuza Momentum fund delivered over 20% in 2025, attracting capital from investors who had grown frustrated with the erosion of purchasing power in traditional safe-haven products.
What special funds investors are buying
Under CMA rules, special funds enjoy far broader investment mandates than their money market counterparts. Managers can allocate to Kenyan and offshore equities, government and corporate bonds, foreign exchange strategies, commodities, precious metals and derivatives including futures and options.
The product design also permits exposure to alternative assets such as real estate, private equity, infrastructure bonds and unlisted securities. This flexibility allows fund managers to construct portfolios that track global technology stocks, S&P 500 indices and gold, linking Kenyan household savings directly to Wall Street and other developed-market exchanges.
Access does not come cheaply. Minimum investments typically range from KSh 100,000 to KSh 500,000 ($770–$3,850), and many funds impose lock-in periods of six to twelve months.
Management fees run higher than MMFs, often 2–6% annually, plus performance fees on gains, making these products suitable primarily for affluent individuals and institutional investors with longer time horizons.
A more sophisticated retail investor emerges
Kenya’s investment culture has undergone a quiet transformation over the past five years. By the second quarter of 2025, unit trust assets had surpassed KSh 596 billion ($4.6 billion), marking one of the fastest accelerations of retail participation in the country’s financial history.
Industry observers describe a “financially woke” middle class and SME sector moving beyond idle cash and low-yield deposits. Younger investors under 40 represent the fastest-growing segment within wealth management portfolios, often using MMFs as an entry product before graduating into special funds, ETFs and offshore exposures.
Digital platforms and mobile-first investment apps have lowered distribution barriers significantly. Built atop Kenya’s mobile money infrastructure, dominated by Safaricom’s M-Pesa with roughly 77% of subscribers, these channels allow asset managers to reach clients who would never walk into a bank branch or brokerage office.
Domestic power shifts and regulatory questions
The rapid growth of special funds is altering the balance of financial influence inside Kenya. Unit trust managers and investment banks such as Standard Investment Bank, Ndovu Wealth and Oak Capital now command pools of capital that rival traditional banking deposits in significance.
This shift raises regulatory questions the CMA will need to address. Special funds reach into less liquid and potentially more opaque assets, including private equity and offshore derivatives, creating redemption and reputational risks if returns disappoint a retail investor base accustomed to the capital preservation of MMFs.
The marketing of “wealth acceleration” strategies promising 20%-plus returns also tests the boundaries of disclosure and suitability frameworks. Kenya’s financial sector studies have long noted increasing interconnectedness between banks, capital markets and state financing needs, a web that could amplify shocks during a global or domestic downturn.
Kenya’s place in the global financial scramble
The special funds story fits into a larger geopolitical frame. Kenya is increasingly described as a formidable African financial centre and a key regional hub, pursuing what scholars call “polyalignment” — diversified relationships with the United States, China, Europe and Gulf states that exploit great-power competition for financing and trade partnerships.
When Kenyan special funds allocate to US-listed technology companies, S&P 500 ETFs or gold, they route domestic savings into financial markets centred on the world’s dominant economies. This dynamic is explored in depth in our pillar series Africa: The New Scramble, which tracks how capital flows, critical minerals and infrastructure finance are reshaping the continent’s relationship with global powers.
Foreign banks operating in Kenya — including South Africa’s Absa, Standard Bank and Nedbank, plus Nigeria’s Access Bank — import Basel standards and investment-product designs that shape how CIS products are structured. Their growing presence reflects intra-African competition for control over East Africa’s expanding pools of capital.
What to watch next
The most immediate risk is a downturn in global risk assets. A correction in US technology stocks or a commodity price shock would flow directly into Kenyan special fund returns, testing the risk tolerance of investors who migrated from MMFs during a period of relatively benign markets.
Regulatory moves also bear watching. The CMA or Central Bank of Kenya could tighten rules on derivatives, use or retail marketing of complex products, potentially redefining the competitive landscape.
And as foreign ownership of Kenyan financial institutions grows, the question of whose interests these funds ultimately serve will become more pointed.
For now, the trend line is unmistakable. Kenya’s savers are voting with their shillings, and they are choosing higher risk in exchange for higher returns, a decision that ties their financial futures more tightly than ever to the rhythms of global capital.
Connected Coverage
Frequently Asked Questions
What is the difference between money market funds and special funds in Kenya?
Money market funds invest in short-term, low-risk instruments like Treasury bills and bank deposits, typically returning 8–11% annually with high liquidity. Special funds managers operate under broader mandates allowing equities, derivatives, commodities and alternative assets, targeting 18–25% returns but carrying higher risk, higher fees and often six- to twelve-month lock-in periods.
Why are Kenyan investors moving out of money market funds?
Falling Treasury bill rates have compressed MMF yields into single digits for many products, making it difficult to outpace inflation and rising living costs. At the same time, a more financially sophisticated middle class, aided by digital investment platforms, is seeking higher returns through special funds that have delivered 18–29% in recent periods.
Are special funds in Kenya safe for retail investors?
Special funds are regulated by the Capital Markets Authority as collective investment schemes, but they carry medium-to-high risk due to exposure to equities, derivatives and less liquid assets. Returns are not guaranteed, performance can be volatile, and the higher fee structures mean outcomes depend heavily on manager skill and market conditions, making them suitable primarily for investors with longer horizons and higher risk tolerance.
Sources
Sources: Capital Markets Authority.
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