How to Invest and Boost Your Income through Money Market Funds in Kenya.

Money market funds are among the major investment vehicles driving the Kenyan economy. 

Now more than ever, Kenyans are cautiously looking for ways to diversify their sources of income and investment portfolios. This could, majorly, be due to the financial blow that the COVID-19 pandemic dealt many individuals and the economy at large.

Consequently, money market funds have become so popular in Kenya, with some companies like ICEA Lion diversifying to the digital versions (See DigiTrust). 

However, before investing, there are some common questions that most people ask about money market funds that you too should understand before investing your money in them:

  1. What Are Money Market Funds?

A money market fund is an investment scheme in which many investors pool their funds and invest to earn an annual (or monthly) interest. They often have a professional fund manager who manages the funds and oversees the investments. 

They contain the money of investors who want to earn interest on their savings over time. 

While not all money market funds work the same way, understanding how they work is the first step in identifying the best way to save for your short-term goals.

2. How Do Money Market Funds Work?

The money pulled together in money market funds is usually invested in short-term debt securities such as:

– Fixed deposits

– Treasury bills and 

– Commercial papers

These investment vehicles have more secure credit ratings than corporate bonds. They also have tax advantages over individual securities since the interest is paid out of the fund’s income and not from your pocket.

3. How Do I Benefit? What Are the Current Interest Rates? 

Money market funds are the simplest and safest way to grow your wealth through the power of compound interest.

Currently, most MMFs will earn you an annual interest of between 9-11% on your initial deposit. This depends on the market performance and other factors affecting an MMF firm’s operations. For instance, Cytonn Money Market Fund currently earn an annual interest of 11%.

Since the interest earned is deposited into your account monthly, you may decide to do monthly withdrawals or wait for the interest to accumulate and withdraw annually.

Money market funds can be part of your overall investment portfolio for security and convenient flow of income. 

4. What’s The Risk? Is My Money Safe?

Since MMFs are licensed and regulated, your investment is always safe. MMFs have fund managers who manage the funds, trustees, custodians, and auditors who work together to ensure transparency and accountability.

Money market funds carry some risk since they invest in short-term debt instruments or other securities that can lose value. However, their returns do not fluctuate much over time, and they pay dividends that beat what you get from bank savings accounts. 

That said, they are among the safest ways to park your money for an appropriate amount of time.

5. Which Are the Safest Money Market Funds in Kenya?

According to a May 2021 report, the Top 10 safest money market funds in Kenya include:

  1. Cytonn Money Market Fund 
  2. ICEA Lion Money Market Fund
  3. Nabo Africa Money Market Fund 
  4. Zimele Money Market Fund 
  5. Alphafrica Kaisha Money Market Fund 
  6. GenCapHela Imara Money Market Fund 
  7. Sanlam Money Market Fund.
  8. CIC Money Market Fund
  9. Britam Money Market Fund 
  10. CBA Group Money Market Fund.

6. How Do I Choose Between Different Money Market Funds?

After doing your online research, checking customer reviews, and asking for referrals from your network, there are a few things you need to ask the company before you decide:

i) Investment Portfolio: Ask for a portfolio of their investment so that you know what your money will be doing to earn you interest. If you cannot point a figure to a portfolio, your investment may be at high risk. 

ii) Past Year Performance: How did the MMF firm perform in the past year? Do they publish their performance on a public platform/website where investors can easily monitor their performance?

iii) Interest Rate – Are their interest rates worth the investment? Also, beware of firms that promise ridiculously high-interest rates (higher than the market rate) – they may be investing in high-risk activities that may blow up in no time.

  iv) Minimum Investment: What is the minimum investment required? Most MMFs require a minimum investment of Ksh.5,000 and voluntary minimum top-ups of Ksh.1,000. Some MMFs like Apollo MMF require a minimum investment of 10,000 so, cut your coat according to your size.

v) Deposit protection-do you get your initial investment back in case you decide to withdraw? Do not invest in a firm that does not protect your initial investment.

vi) Reputation and Track Record: How long has the firm been around, and what’s its track record and reputation? Does it display stable or fluctuating performance over the years?

vii) Hidden charges: In any business or investment, there are always hidden costs/charges. If not carefully evaluated, these charges may eat into your accrued interest and leave you with nothing but losses. 

Find out the hidden charges involved, such as management fees, enrollment fees, transaction fees, processing fees, and penalties, then see if it is worth the risk.

7. Is There Liquidity?

Before investing in any MMF, find out the ease with which you can withdraw your money anytime you need it. Generally, MMFs are liquid markets, meaning that it is easy to buy or sell shares of the funds.

The funds must maintain a stable price and can be sold at any time. This provides high liquidity hence, investors can easily withdraw their money within a reasonable duration.

8. Is It Worth My Money?

Money Market Funds are thought of as places to park cash for the short term. Because of the low interest rates, they are almost always used by people who do not want to earn money with investments but want to save cash with safety.

You can invest in them as an alternative to a savings account.

Unlike in a savings account where the value of your money is constantly eaten away by inflation, the fixed rate of return in MMF is safe from inflation.


Money market funds are, therefore, ideal for people who are looking for higher yields they can’t get in a regular savings account. 

With proper due diligence, choosing the right money market firm, and investing a good amount of money, MMFs can be a safe and consistent investment tool that help you achieve your short-term (and even some long-term) life goals with ease.

However, there is one important thing that you need to know before investing – locking your money up in a money market fund for an extended period is not advisable. 

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