If you are a Kenyan investor and you are looking for investment opportunities, a money market fund is a great option. Money market fund is ideal for new investors and people who want to invest in low-risk securities. Also, a money market fund has a shorter investment period compared to many other investment options. In this article, we will provide you with a list of some of the best money market funds in Kenya 2021, how it works and how to invest in it.
Benefits of Money Market Fund in Kenya
- High yields. A money market fund is a mutual fund that invest in highly liquid instruments like cash, high-rated debt-based securities and cash equivalents.
- Security. A money market fund is a safe and secure investment option with minimal risks. They are less risky than stocks or long term bonds. Money market funds are regulated by the Capital Markets Authority in Kenya.
- Quick returns. They are short term investment because of short maturity period.
- Liquidity. You can withdraw your funds within short notice (next business day in some cases).
Can you lose money in money market fund? Since money market funds are investments as opposed to savings, there’s the possibility of losing your money. Past performance does not guarantee future investment performance.
What is a Money Market Fund?
A money market fund is a mutual fund that invests in low-risk securities like cash and cash equivalents. It invests in highly liquid instruments like cash, cash equivalents and debt securities with a short-term maturity. The money market fund in Kenya is regulated by the Capital Markets Authority (CMA), it is a safe and secure investment.
Factors to Consider When selecting a Money Market Fund
Before selecting a money market fund, make sure to first shop around. Consider the following factors and compare them between the money market funds.
- Fees. It is best that you get to know how much money market fund will cost you. It would be best if you compare prices between different money market funds.
Interest rates. Look for companies that offer high and guaranteed interest rates. Look for companies with guaranteed interest rates. Search for the highest among these guaranteed interest rates.
Minimum balance. You need to consider the minimum balance required before settling on an investment company. Make sure you can afford the minimum balance.
Terms of withdrawal. Many investment companies require one to give notice before making a withdrawal. As such, it is best you consider a company’s terms and conditions of withdrawal.
How Money Market Funds Work in Kenya
Money market funds in Kenya are low-risk, short-term investments that give you stable returns. In Kenya, these can be in the form of treasury bills, short term bonds, fixed deposit accounts, etc. You need to identify best performing money market fund and sign up. Depending on the fund you have chosen, you can sign up via an app, website, USSD code, etc.
List of Best Money Market Funds in Kenya
If you want to invest in the money market fund in Kenya, it is best that you first shop around. Look for a money market fund you can afford and one with high-interest rates. Some of the money market funds you can consider in Kenya include the following:
Zimele Money Market Fund Kenya
Zimele Money Market Fund is an ideal investment option if you want to save for emergencies, build savings for a group, or are planning to save money for a long-term project.
- Zimele allows investors to invest in a flexible and convenient way. Zimele invests in Treasury bonds, Treasury bills and fixed deposits. Zimele is regulated by the Capital Markets Authority.
You need a minimum deposit of Ksh 100 and you don’t need to maintain a minimum balance.
Zimele does not have hidden fees and inters is compounded annually. You can deposit funds through – Mpesa while you can also get statements online.
Sanlam Money Market Fund Kenya
Sanlam Money Market Fund invests in high-yielding securities like treasury bills, fixed deposits and commercial papers. Fixed deposits earn higher interests compared to those given by banks. It has a maturity duration of one year. The minimum investment amount is Ksh 2,500. It does not charge fees.
It offers higher returns compared to banks’ fixed deposits. It offers compound interest that is calculated daily and credited to the investor’s account on monthly basis.
NCBA Money Market Fund Kenya
NCBA Money Market Fund invests in interest-bearing assets like fixed deposits and near-cash holdings. You need a minimum investment of Ksh 5,000 for each unit trust. The minimum investment additional amount is also Ksh 5,000. It does not charge account opening fees but charges a management fee of 2% per annum.
The interest rate is calculated daily and then credit into the investor’s account every month. You can reinvest into the fund to maximize returns.
CIC Money Market Fund Kenya
CIC Money Market Fund invests in assets like near-cash and interest investments like fixed deposits, government paper and bear cash holdings. It is a low-risk investment ideal for new and beginner investors. You can withdraw funds within short notice and you will not be charged penalty fees.
Among the benefits of investing in the CIC money market includes:
- High returns since interest are calculated daily and credited in the investor’s account on monthly basis.
Liquidity. You can withdraw funds within short notice.
Security. It invests in liquid instruments that are secure.
You get professional management of your investment account
Cytonn Money Market Fund Kenya
Cytonn Money Market Fund is one of the best performing money market fund in Kenya. It invests in high interest-bearing assets like fixed deposits and near-cash holding in the Kenyan market. It is ideal for new and beginner investors. It does not charge account opening fees. Its rates depend on the current market.
UAP Old Mutual Money Market Fund Kenya
It invests in high-interest-bearing assets. You need a minimum investment amount of Ksh 1,000 while you also need to be making monthly contributions of Ksh 1,000. There are no restrictions on the investment duration. Interest is calculated daily and then credited to the investor’s account on monthly basis.
Read also: Best Investment Banks in Kenya
A money market fund is a low-risk investment that is ideal for short-term investors. If you are new to investing and you are looking for a safe investment option, a money market fund is an excellent option. You can invest for one year while some companies allow you to withdraw invested funds within short notice. Some of the factors to consider when selecting a money market fund include fees charged, interest rates and minimum balance.