Money Market Funds in Kenya: How They Work and How to Choose
How money market funds in Kenya work, what they hold, how yields and fees are quoted, the real risks, and how to check a fund is approved by the CMA.
A money market fund (MMF) in Kenya is a type of unit trust. Many investors pool their money, and a licensed fund manager invests it in short-term, interest-earning instruments such as government securities, fixed deposits, call deposits and rated commercial paper. You own units, your share of the interest builds up, and you can usually ask for your money back on any dealing day. Funds must be approved by the Capital Markets Authority (CMA) before they can take money from the public.
An MMF is not a bank account. It is not covered by the Kenya Deposit Insurance Corporation (KDIC), and returns are not guaranteed. This guide explains how to read a fund's yield, what can go wrong, how to check a fund is approved and how to compare funds. It does not recommend any fund.
What a money market fund is and what it holds
Under Kenya's Capital Markets (Collective Investment Schemes) Regulations, 2023, a money market fund "invests only in interest-earning money market instruments" with a maximum weighted average tenor of 18 months (regulation 102(1)(a)). The permitted instruments include credit-rated commercial paper, government securities, call deposits and certificates of deposit.
In plain terms, the fund lends money for short periods to the government, banks and some companies, and passes the interest to investors after costs. Because the holdings are short-term, the yield moves with interest rates.
The CMA's Collective Investment Schemes Quarterly Report for the quarter ended 30 June 2026 reported:
- Total assets in collective investment schemes of about KES 948.7 billion.
- Money market funds holding about KES 460 billion, roughly 48% to 49% of the total. The report's Table 16 shows this share falling from 88% in March 2020, as fixed income and special funds grew.
- About 4.1 million investors, up from about 2.5 million in June 2025.
- Across all schemes, government securities (41.3%) and fixed deposits (24.3%) were the largest holdings.
Who looks after your money
A Kenyan collective investment scheme has three separate parties. The 2023 Regulations require the fund manager to be independent of the trustee and the custodian.
- Fund manager: Manages and administers the scheme (regulation 49). It must publish prices daily, or at the intervals set out in the fund's information memorandum, and send investors a statement every month (regulation 52).
- Trustee: Oversees the scheme and makes sure it is run in line with its documents (regulations 30 and 36). It cannot delegate that oversight to the fund manager (regulation 44).
- Custodian: Holds the fund's assets. It must be licensed by the CMA and must be a bank or another qualifying financial institution (regulations 64 and 65).
This split is a key protection. It does not remove investment risk, but it means no single party both manages and holds the money.
How the yield is quoted
Annualized, not what you get each day
A fund's quoted yield is an annual rate. Interest is often worked out daily and credited at set intervals. One bank's product page (checked 27 October 2026) says interest is usually calculated daily and credited at the start of each month.
An effective annual yield includes interest earning interest. A simple annual rate does not. A simple 8% credited monthly works out at about 8.3% effective over a full year.
Gross versus net
- Gross yield is the return before costs.
- Net yield is after the fund's charges, mainly the annual management fee.
Funds present this differently. The same bank page says its effective annual yield is net of the management fee but gross of withholding tax and the bank's admin charge. Read the fact sheet so you compare like with like.
The Regulations require fees paid from the fund to be disclosed in the information memorandum (regulation 54(4)), and returns to be presented as time-weighted figures, including one-, three- and five-year annualized returns (regulations 122(4) and 122(7)).
Worked example with round numbers
These figures are illustrative only. They are not any fund's yield.
- A fund earns a gross yield of 10% a year on its holdings.
- It charges a management fee of 2% a year. The net yield is about 8%.
- On KES 50,000, daily interest is about KES 50,000 × 8% ÷ 365, or roughly KES 11.
- If tax of 15% were deducted (an assumed rate), the after-tax yield would be about 8% × 0.85 = 6.8%.
To see how interest builds over several years, try the compound interest calculator.
Why yields change
MMF yields follow short-term interest rates in the economy. On 7 October 2026, the Central Bank of Kenya's Monetary Policy Committee kept the Central Bank Rate at 8.75%. At the 8 October 2026 auction, Treasury bill rates were 8.762% for 91 days, 8.874% for 182 days and 9.035% for 364 days (CBK Weekly Bulletin, 9 October 2026). When rates fall, new holdings earn less and fund yields usually fall too, and the reverse when rates rise. This is context, not a forecast.
How MMF returns are taxed
Interest earned through an MMF may be taxed. For example, one bank's MMF product page says withholding tax applies to the interest and is deducted at source, so you receive the interest after tax. The Kenya Revenue Authority's withholding tax page lists 15% for bank interest, but does not set out how collective investment scheme returns are treated. So this guide does not state a rate for MMFs. Check the fund's documents for the tax it deducts, and confirm with KRA. Separately, the Income Tax (Collective Investment Schemes Income Tax Exemption) Rules, 2026 (Legal Notice No. 170 of 2026, gazetted 28 August 2026) set new conditions for schemes to keep their own income tax exemption under section 20 of the Income Tax Act. These rules concern the scheme's tax position. Ask your fund how they affect it.
Is a money market fund safe?
- Not a bank deposit, no KDIC cover. KDIC's deposit insurance page lists mutual funds, including money market funds, and unit trusts among products it does not cover. KDIC covers deposits at member banks up to KES 500,000 per depositor per institution.
- Credit risk. If a company or bank the fund has lent to cannot repay, the fund can lose money.
- Liquidity risk. In a stressed market, a fund may find it harder to sell holdings quickly to pay many withdrawals at once.
- Interest rate risk. Yields fall when market rates fall.
- Past returns are not a promise. Regulation 122(5) bars fund managers from linking actual performance to theoretical or prospective performance.
How to check that a fund is approved by the CMA
Regulation 20 says a scheme may not pool money from the public unless the CMA has approved it.
- Open the CMA's online list of licensees for collective investment schemes (licensees.cma.or.ke). It lists approved schemes and the funds under each one, such as money market, fixed income, equity and balanced funds.
- Search for the exact names of the scheme and fund, because names can be similar.
- Check the fund manager's own website and fact sheet. They should name the trustee and the custodian.
- If an entity is not on the list, do not send money. Report it to the CMA or the DCI.
How to start investing in an MMF
- Choose two or three approved funds to compare using the checklist in the next section.
- Read the key documents. The Regulations require a key investor information document, approved by the trustee and filed with the CMA, and an information memorandum that you can inspect (regulations 21 to 23). The monthly fact sheet shows the current yield, fees and holdings.
- Open an account. Some managers let you sign up online or by app. Expect identity checks ("know your customer" or KYC), such as verifying your national ID.
- Make your first deposit. Minimums vary. Two product pages checked on 27 October 2026 list KES 100 and KES 500.
- Top up regularly. Many funds accept top-ups by M-Pesa paybill or bank transfer. Use only the payment details shown in the fund's official documents or app.
- Keep your statements. You should get a statement at least monthly.
How withdrawals work
You ask the fund manager to redeem (sell) some or all of your units. The 2023 Regulations require the manager to accept redemption requests on any dealing day and to pay the proceeds within three days (regulations 91 and 92).
In practice, timing varies with cut-off times and payment channels. One manager's page says withdrawals are typically processed within 48 hours after the request is approved. A bank page says proceeds are normally released in 2 to 3 business days. Check your own fund's terms, and do not assume same-day access.
How to compare money market funds
Look beyond the headline rate.
| What to check | Why it matters |
|---|---|
| Net yield over several months | One day's figure can mislead. A steady trend tells you more. |
| Whether the yield is gross or net of fees and tax | Lets you compare like with like. |
| Management and other fees | Fees come out of your return every year. |
| Fund size | A very small fund may be more affected by large withdrawals. |
| Holdings | See how much is in government securities, bank deposits and corporate paper. |
| Manager's track record | Look at one-, three- and five-year returns where available. |
| Trustee and custodian | Both should be named and independent of the manager. |
| Withdrawal terms | Cut-off times, payout channels and typical days to receive money. |
MMF vs fixed deposit vs SACCO vs Treasury bills
| Feature | Money market fund | Bank fixed deposit | SACCO deposits | Treasury bills |
|---|---|---|---|---|
| Who regulates | CMA | CBK (bank) | SASRA for regulated SACCOs | Issued by government through CBK |
| KDIC cover | No | Yes, up to KES 500,000 per depositor per bank | No | No (KDIC excludes government securities) |
| Return | Variable, changes with rates | Agreed rate for a fixed term | Depends on the SACCO | Fixed discount set at auction |
| Access | Withdraw on a dealing day; regulations say pay within three days | Usually at end of term | Non-withdrawable deposits refunded only when you exit, per SASRA | At maturity: 91, 182 or 364 days |
| Minimum | Varies by fund | Varies by bank | Varies by SACCO | KES 50,000 face value (non-competitive bid) |
- Fixed deposits have KDIC cover up to the limit, but money is usually tied up for the term. CBK's website listed the average commercial bank deposit rate at 6.94% for September 2026.
- SACCOs are supervised by the SACCO Societies Regulatory Authority (SASRA). SASRA says non-withdrawable deposits can only be refunded when a member exits the SACCO, although they can support borrowing.
- Treasury bills are sold at a discount: you pay less than face value and get the full face value at maturity. You can buy through CBK's DhowCSD portal or app, by USSD, or through a bank. An MMF may hold T-bills itself, giving similar exposure for smaller amounts, but with fees and no fixed rate.
For more on choosing between keeping money safe and growing it, read saving vs investing.
Using an MMF for an emergency fund or sinking funds
An emergency fund needs to be safe and reachable. An MMF can suit part of it, because you can usually withdraw within days and the money earns interest. But it is not instant or insured. A practical approach:
- Keep a small amount for same-day emergencies in your bank account or mobile wallet.
- Hold the rest of your emergency savings in an approved MMF.
- Work out your target with the emergency fund calculator, and follow the steps in how to build an emergency fund.
MMFs can also hold sinking funds, money you set aside for known costs such as school fees, insurance or car servicing. See sinking funds for irregular expenses.
For goals many years away, an MMF alone may not be enough. Saving and investing for young Africans and what is an ETF explain other options.
Red flags to watch for
- Promised fixed high returns. A real MMF's yield changes with interest rates. A "guaranteed" high rate is a warning sign.
- Not on the CMA list. On 11 September 2026, the CMA published a public caution naming entities it said were offering investment services without the required licensing or approval and were under investigation by the DCI.
- Pressure to pay quickly or to send money to a personal M-Pesa number.
- No named trustee or custodian, or no fact sheet.
When in doubt, check the CMA's list of licensees and its public caution against investment scams.
Money market funds in other countries
MMFs exist in other countries under their own rules. In South Africa, the Financial Sector Conduct Authority (FSCA) administers the Collective Investment Schemes Control Act, 2002. South African readers may also like our guide to the tax-free savings account in South Africa. In Nigeria, collective investment schemes are defined under the Investments and Securities Act, and the Securities and Exchange Commission publishes guidance on them. Always check the regulator's list in your own country.
Frequently asked questions
Can I lose money in a money market fund in Kenya?
Yes, it is possible. MMFs hold lower-risk short-term instruments, but a borrower could default, and returns are not guaranteed. KDIC deposit insurance does not cover MMFs.
How do I know if a money market fund is licensed?
Search for the scheme and fund on the CMA's list of licensees at licensees.cma.or.ke. The fund's documents should also name its trustee and custodian.
How long does it take to withdraw from an MMF?
The 2023 CIS Regulations require redemption proceeds to be paid within three days. Actual timing depends on the fund's cut-off times and payment channel, so check its terms.
Is the yield I see the amount I will earn?
Not necessarily. The quoted figure is an annual rate that changes over time. It may be before or after fees, and is often before tax. Check the fact sheet to see what is included.
Is an MMF better than a SACCO or fixed deposit?
It depends on your goal. A fixed deposit has KDIC cover up to KES 500,000 and a set rate, but locks your money for a term. SACCO deposits may be hard to withdraw. An MMF is more flexible but uninsured and variable.
Are MMF returns taxed in Kenya?
They may be. At least one fund product page says withholding tax is deducted from the interest at source. Check the fund's documents for the rate it applies, and confirm with KRA.
Sources
- CMA, Capital Markets (Collective Investment Schemes) Regulations, 2023 (Legal Notice No. 173, 27 October 2023)
- CMA, Regulatory framework page
- CMA, Collective Investment Schemes Quarterly Report, quarter ended 30 June 2026
- CMA, List of licensees: collective investment schemes
- CMA, Public caution against investment scams (11 September 2026)
- KDIC, Deposit insurance
- KRA, Withholding tax
- KPMG Kenya, New rules on income tax exemption for collective investment schemes (2026)
- CBK, MPC retains the CBR at 8.75 percent (7 October 2026)
- CBK, Weekly Bulletin, 9 October 2026
- CBK, Treasury bills
- CBK, Key rates: deposit rate, September 2026 (checked 27 October 2026)
- SASRA, Frequently asked questions
- Standard Chartered Kenya, SC Shilingi Funds product page (checked 27 October 2026)
- Jubilee Insurance Kenya, How money market funds work in Kenya (checked 27 October 2026)
- FSCA, Investor or owner of assets
- SEC Nigeria, FAQs on collective investment schemes
This article is general information, not personal financial advice. Yields, rates, fees, tax treatment and regulations change, so check the CMA's list, the fund's current documents and official CBK, KDIC and KRA figures before you act.
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