MMFs lose dominance as more investors seek higher returns
Enterprise
By
David Njaaga
| Oct 22, 2025
Local investors are rethinking their approach to wealth creation as the once-booming money market funds (MMFs) lose their dominance.
Over the past five years, MMFs controlled Sh319.7 billion, representing 64.4 per cent of total assets under management by collective investment schemes as of March 2025, according to the Capital Markets Authority (CMA).
The funds thrived during the high-interest rate regime of 2021 to 2023, offering returns of 10 per cent to 13 per cent, outperforming traditional savings accounts and drawing both institutional and retail investors.
Cytonn, Kuza, Sanlam and GulfCap were among the top performers, promoting MMFs as low-risk, high-liquidity tools for short-term savers.]
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Despite the yield compression, some funds have shown resilience. Cytonn Money Market Fund posted a net return of 13.24 per cent in September 2025, followed closely by GulfCap at 12.58 per cent and Kuza at 12.03 per cent.
These top performers have retained investor interest by actively managing their portfolios and maintaining exposure to high-yielding Treasury instruments, even as the broader market softened.
High-net-worth individuals and institutional clients are increasingly allocating capital to dollar-denominated funds and diversified portfolios, seeking protection against shilling depreciation and aiming for higher long-term returns.
Fund managers at Nabo Capital and Sanlam Investments have reported growing interest in these instruments, especially among investors looking to hedge currency risk and diversify beyond short-term fixed-income products.
Britam Asset Managers Chief Executive Barack Obatsa highlighted the continued relevance of MMFs for liquidity but stressed the need for balanced portfolios.
“An MMF is a good liquidity solution, a place to park your money rather than a place to invest for a long period. It offers stability and access when you need to deploy funds for other investments or spending,” he said.
On balancing MMFs with higher-return instruments, Obatsa added: “So the money market funds are very key for those ones who can, who have the appetite to take that risk. They can do their due diligence and consider investing there. But I always say, whatever it is, just ensure that your portfolio is very well balanced.”
He also noted the growing investor appetite for higher-risk, higher-return products.
Introduced in Kenya in 2003, MMFs gained mass traction only in the last decade due to digital onboarding, mobile access and financial literacy campaigns. Young professionals and small and medium enterprises particularly embraced them as flexible cash management tools.