A money market fund (MMF) is a type of mutual or unit fund that invests in short-term, low-risk debt securities. These funds are designed to give investors a relatively stable investment option to preserve capital and provide modest returns. Investment companies, banks, and brokerage firms typically offer money market funds.
In Kenya, money market funds are regulated by the Capital Markets Authority (CMA), and they invest in various instruments, such as government Treasury bills, commercial paper, certificates of deposit (CDs), repurchase agreements, and short-term corporate debt. These investments are known for their short maturity periods, typically ranging from a few days to one year, which helps maintain liquidity and reduces the risk of interest rate fluctuations. It is also vital to note that money market funds are taxes, a withholding tax of 15% which is remitted to the Kenya Revenue Authority (KRA) monthly.
Investors often turn to money market funds as a cash management tool or a short-term parking place for funds that are not immediately needed, such as setting up emergency and sinking funds. These funds offer easy access to the invested capital, allowing investors to redeem their shares and access their funds quickly. MMFs offer better returns than the fixed deposit accounts provided by banks as their interest is compounded.
While money market funds are considered low-risk investments, they are not guaranteed by the government or the fund provider. There is still a possibility of losing money in a money market fund, although the likelihood is relatively low compared to higher-risk investments.
To get maximum returns in an MMF, one should invest consistently and be patient. Before investing in a money market fund, investors should carefully review the fund’s prospectus to understand its investment objectives, fees, and risks. It’s also recommended to consult with a financial advisor to determine if a money market fund aligns with their investment goals and risk tolerance.
Several companies offer MMFs in Kenya, such as banks, brokerage firms, and insurance institutions. While choosing an MMF ensure that the fund aligns with your saving goals and lifestyle. It is also essential to consider factors such as credibility, customer service, withdrawal duration, initial deposit, top-up, annual management fee, etc.
Apart from the competitive compound interest returns, different money market funds offer other value-added services such as customer portals, apps, monthly statements, and savings calculators, to mention a few. Below are some MMFs to consider:
Cytonn Money Market Fund
Annual Interest rate 10.8%
Initial minimum investment amount of Kes 100
No minimum top-up amounts
Annual Management fee 2%
Withdrawals below 300k are processed on the day of request via MPESA while those above 300k can only be done to the bank and will take 2-4 working days.
Kuza Money Market Fund
Annual Interest rate 10.62%
Initial minimum investment amount of Kes 5000
Minimum top-up amount of Kes 1000
Annual Management fee of 2%
Withdrawals are processed in 3 working days
Genghis GenCap Hela Imara Money Market Fund
Annual Interest rate 10.4%
Initial minimum investment amount of Kes 500
Minimum top-up amount of Kes 500
Annual Management fee of 2%
Withdrawals are processed in 2 – 4 working days
Dry Associates Money Market Fund
Annual Interest rate 10.08%
Initial minimum investment amount of Kes 1,000,000
Minimum top-up amount 250000
Annual Management fee of 2.48%
Withdrawal processed within three working days
NCBA Money Market Fund
Annual Interest rate 9.8%
Initial minimum investment amount of Kes 5000
Minimum top-up amount of Kes 5000
Annual Management fee 2%
Withdrawals are processed in 3 working days
UAP Old Mutual Money Market Fund
Annual Interest rate 9.7%
Initial minimum investment amount of Kes 1,000
Minimum top-up amount of Kes 1,000
Annual Management fee 1%
Withdrawals are processed in 3 working days
Nabo Capital Money Market Fund
Annual Interest rate 9.6%
Initial minimum investment amount of Kes 100000
Minimum top-up amount 10000
Annual Management fee 1.5%
Withdrawal processed within 2 working days
Sanlam Money Market Fund
Annual Interest rate 9.57%
Initial minimum investment amount of Kes 2500
Minimum top-up amount 1000
Annual Management fee 1.2%
Withdrawal processed within 3 working days
Zimele Money Market Fund
Annual Interest rate 9.56%
Initial minimum investment amount of Kes 100
No minimum top-up amount
Annual Management fee 2%
Withdrawals are processed in 3 working days
CIC Money Market Fund Money Market Fund
Annual Interest rate 9.5%
Initial minimum investment amount of Kes 5000
Minimum top-up amount 1000
Annual Management fee 2%
APA Apollo Money Market Fund
Annual Interest rate 9.4%
Initial minimum investment amount of Kes 1000
Minimum top-up amount 1000
Annual Management fee 2%
Withdrawal processed within 3 working days
Madison Money Market Fund
Annual interest rate 9.3%
Initial minimum investment amount of Kes 5,000
Minimum top-up amount of Kes 1,000
Annual Management fee 2%
Withdrawals are processed in 3 working days
ICEA Lion Money Market Fund
Annual Interest rate 8.9%
Initial minimum investment amount of Kes 500
No minimum top-up amounts
Annual Management fee 2%
Withdrawals below 10kare processed on the day of request while those above 10K are processed within 2-4 working days.
Britam Money Market Fund
Annual Interest rate 8.9%
Initial minimum investment amount of Kes 1000
Minimum top-up amount 1000
Annual Management fee 1.5%
Withdrawal processed within 2 working days
N/B The interest rates fluctuate depending on the market rates.