Kenya: Top 5 Money Market Fund Yield in Q1’2023

Money Market Fund was created in order to offer an alternative to bank accounts that pay interest in the 1970s.

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Aug 7, 2023 - 16:31
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Kenya: Top 5 Money Market Fund Yield in Q1’2023
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Money Market Fund (MMF) invests in highly rated short-term debt instruments. They produce some income but little to no capital growth. In order to offer an alternative to bank accounts that pay interest, money market funds were created in the 1970s.

One of the key factors contributing to the popularity of money market funds (MMFs) in Kenya is their greater yields when compared to the earnings on bank deposits. The average deposit rate rose from 7.5% in January 2023 to 7.6% in March 2023, according to data from the Central Bank of Kenya. Despite the rise, average deposit rates still provide the lowest returns when compared to the average yields of 91-day T-bills and money market funds, which are 9.8% and 9.5%, respectively.

According to the rules, money held in MMFs must be invested in short-term, liquid, interest-bearing assets that mature in 13 months or less or less. Treasury bills, call deposits, commercial papers, and fixed deposits in commercial banks and deposit-taking institutions are some examples of short-term securities as defined by CBK. As a result, investors who want a low-risk investment with capital stability and liquidity and a high-income yield should choose money market funds. During uncertain times, the fund is an excellent safe haven for investors who want to transfer from a higher-risk to a low-risk portfolio.

Top Five Money Market Funds by Yields

During the period under review, the following Money Market Funds had the highest average effective annual yield declared, with the Cytonn Money Market Fund having the highest effective annual yield at 10.9% against the industry Q1’2023 average of 9.4%. Apollo Money Market Fund came in second at the rate of 10.2%, GenCap Hela Imara Money Market Fund, Zimele Money Market Fund, and NCBA Money Market Fund followed with a rate of 9.9%.

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