A Money Market Fund (MMF) is a pooled investment that holds low-risk, short-term debt — mostly Kenyan Treasury bills, short-dated government bonds, and fixed deposits with commercial banks. You buy units in the fund with KES; the fund manager invests the pool; you earn a share of the daily interest proportional to your balance.
MMFs in Kenya are regulated by the Capital Markets Authority (CMA). They must publish a daily yield, cap concentration risk, and hold assets in a separate custodian account — your money is never on the fund manager's balance sheet.
How returns are paid
Most Kenyan MMFs accrue interest daily and credit it monthly into your account (or your unit balance). Yields quoted are annualised — e.g. a 10% yield means you would earn roughly 10% over 12 months if the rate held constant.
Kenya levies a 15% withholding tax on interest. Reputable fund managers quote both figures: the gross yield (before tax) and the net yield (what you actually keep). On realtimerates we default to the net yield so comparisons are apples-to-apples.
Why MMFs usually beat bank savings
- Banks pay you ~5-7% on savings because they make their spread lending your money at 14-18%.
- MMFs pass almost all of the T-bill yield through to you, minus a small management fee (typically 0.5-2% p.a.).
- T-bill yields in Kenya have sat between 10-16% through 2023-2026, so MMF net yields have consistently beaten bank savings by 3-5 percentage points.
What are the risks?
- Not guaranteed — there is no KDIC-style protection like bank deposits. Your capital is at risk if the manager mismanages (rare but possible).
- Yield is not fixed. If CBK cuts the policy rate or T-bill yields fall, your MMF yield will follow within weeks.
- Redemptions typically settle in 2-4 business days. Don't park cash you need tomorrow morning.
Who should use one?
MMFs are best for emergency funds, short-term savings, and cash you haven't allocated yet. They are not a replacement for long-term equity investing — expected real returns (after inflation) are positive but modest.