The Definitive Guide to the Money Market Fund in Kenya for Beginners

If you have been looking for ways to make money online, you have probably heard about the money market fund. The money market fund is becoming extremely popular in Kenya for various reasons. But, what exactly is it? Can the money

market mutual funds help me grow my money in Kenya? Or perhaps you are wondering if you can use the money market fund as emergency funds. You might also be planning to invest in the money market funds for retirement planning. Today our experienced money market fund specialists will take you through everything you should know about the money market fund in Kenya. 

What Exactly is the Money Market Fund in Kenya?

The money market fund, popularly known as MMF, is a collective investment scheme that allows investors to invest in short-term and low-risk investments like:

  • Treasury bills 
  • Fixed deposits 
  • Demand deposits
  • Treasury bonds
  • Commercial papers

You can invest in a money market fund through a licensed fund manager. The fund manager then invests the pooled funds in low-risk securities on behalf of the unitholders. Money market funds in Kenya earn interest daily. 

How Do Money Market Funds in Kenya Work?

Now that you know what a money market fund is, let’s discuss how this unit trust works. To understand how MMF works, you must understand what a unit trust is. Simply put, a unit trust is a collective investment scheme that allows investors to pool funds and invest in various instruments and equities. Apart from money market funds, the other types of unit trusts in Kenya are equity funds, fixed income funds, and balanced funds. Unlike these other unit trusts, the money market funds invest in the lowest risk and short-term security. 

The money market fund in Kenya is regulated by the Capital Market Authority (CMA). Anyone who is of legal age can open a money market account. Additionally, churches, joint members, chamas, Saccos, corporates, and schools can also open a money market account in Kenya. 

Is Money Market Fund a Good Investment in Kenya?

Money market funds might be the best investment option for you if you want to put your money in a safe investment within a very short period. Compared to other investment options like buying stocks and shares, money market funds are less risky. What’s more, it’s highly liquid and flexible. This means that you can get your funds within three days upon request. 

Besides, you can top up your money market account via bank transfer or mobile money payments like MPesa. The fund also earns competitive interest returns daily. The interest made can also be reinvested to maximize your returns on investment (ROI). 

Can I Lose Money in a Money Market Fund Kenya?

Unlike many other investments, mmf gives you more security and advantages in that it invests mostly on government papers and fixed deposits. MMF is highly regulated by the capital market authority CMA and in addition, it’s very rare for the government to default on its payment obligation. The inflation might make the fund lose value, however, in Kenya, money market fund interest rates have always been above inflation.

Which Money Market Fund is the Best?

With various money market funds in Kenya, you might find it hard to pick the best money market fund. When choosing a money market fund, you must consider various variables. To begin with, you have to find out whether the fund manager is registered with CMA. Secondly, you have to check the fund manager total portfolio and the factsheet showing the different allocations of the investments under the fund manager. In addition, check the history of the interest rates given by the fund manager and how often they fluctuate compared to the market average performance. However, high interest rates of a particular money market fund do not necessarily indicate a good investment. Fund managers who have invested a big percentage of their portfolio in commercial papers expose the funds to a higher risk.

While you are at it, choose the money market fund with a high credit ratings, larger portfolio, consistent interest rates, ease of access, and best customer service. Above all, choose a CMA-approved money market fund.

Some of the money market funds in Kenya 2022 include, in no particular order:

  • CIC money market fund – has the highest market share and funds under management
  • Sanlam money market fund
  • Britam money market fund
  • ICEA money market fund
  • NCBA money market fund
  • Madison money market fund
  • Co-op money market fund
  • Zimele money market fund
  • Cytonn money market fund among others

How to Open a Money Market Fund Account in Kenya for Individuals?

Opening a money market fund in Kenya is a straightforward process, you are required to fill an investment application form and provide the following documents:

  • Copy of KRA pin certificate
  • Copy of ID or passport
  • Passport photo 
  • Bank account details 

How to Open a Money Market Account in Kenya for Chama’s and Other Joint Investments?

To open a money market account for your Chama or a joint account, you have to provide the following:

  • Completed investment application form
  • Copy of IDs or passports for the signatories
  • Copy of KRA pin for signatories
  • Passport photo for signatories
  • Bank details

How to Open Money Market Funds for Corporates like saccos, schools, churches, law firms, professional association bodies and other institutions?

To open a money market fund account for an organization, you need the following:

  • Completed investment application form
  • Board resolution/minutes extracts to invest
  • Copy of company KRA pin
  • Copy of ID or passport for each signatory 
  • Bank details
  • Certificate of incorporation
  • Passport photos for each signatory

Why choose Earnest Consultants as my financial advisor?

In the last 2 years, Earnest Consultants has assisted over 300 clients to open a money market account and guided them through the process. Our clientele ranges from Saccos, churches, schools, individuals, chamas, law firm, professional associations.

We will assist in advising you on the best fund manager, help in opening the money market investment account and ensure we are in touch with you throughout your investment period.

Ready to start earning competitive interest returns on your money? Contact us today to learn more. 

 

 

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