Kenyan investors are steadily redirecting their savings away from traditional bank accounts toward Money Market Funds (MMFs), as returns, liquidity, and ease of access continue to tilt in favour of unit trusts. By early 2026, MMFs had reached about KSh 400 billion in assets under management, accounting for nearly 58.9% of all unit trust assets in the country, according to industry data.
The shift has gathered pace over the past two years as interest rates moderated and savers reassessed how to protect cash balances without locking funds away. Investor accounts in MMFs rose to 2.46 million by the second quarter of 2025, up sharply from pre-2024 levels.
The yield gap with banks
The main attraction remains returns. While MMF yields have eased from the unusually high levels seen in 2024, when some funds posted returns of up to 18%, they have continued to outperform bank deposits even as the Central Bank Rate declined.
By December 2025, average net MMF returns ranged between about 7.73% and 9.0%, compared with bank deposit rates averaging between 6.4% and 7.19% over the year. Leading funds such as Cytonn, Nabo Africa, and Etica reported net annual yields of between 9.3% and 10.1% in late 2025, keeping a clear margin over savings accounts.
For many retail investors, the structure of MMFs also matters. Interest is typically calculated daily and credited monthly, allowing compounding to work more efficiently than in most standard bank savings products. With Kenya’s inflation rate estimated at around 4.5% in early 2026, MMFs have remained one of the few low-risk savings options offering real returns after inflation.
Liquidity without lock-ins
Unlike fixed deposits, Money Market Funds allow investors to access their money with minimal delay. Withdrawals from most funds are processed within 24 to 72 hours, and in some cases much faster through mobile-linked platforms.
Digital channels have played a central role in this change. Products integrated with mobile wallets and apps (such as M-PESA’s Mali platform, Ndovu, Zimele, and Ziidi) allow investors to add or withdraw funds directly from their phones. This has made MMFs a common choice for emergency savings, where accessibility matters as much as yield.
As a result, MMFs are increasingly used as cash management tools rather than long-term investment vehicles, particularly among salaried workers and small business owners who need flexibility.
Lower entry thresholds
Banks typically reserve higher deposit rates for customers willing to commit large balances or long tenors. MMFs, by contrast, allow entry with much smaller amounts. Many funds accept initial investments of between KSh 100 and KSh 1,000, bringing higher-yield savings within reach of students, informal sector workers, and first-time investors.
Cost transparency has also helped adoption. Management fees, usually between 2% and 3% annually, are already deducted before net yields are published, making it easier for investors to compare funds. By comparison, bank savings accounts may carry ledger fees, transaction charges, or penalties that reduce effective returns, particularly on small balances.
Professional management and oversight
MMFs pool investor money to purchase short-term securities such as Treasury Bills, government bonds, and high-quality corporate paper. This diversification reduces exposure to any single issuer and allows retail investors to access instruments that would otherwise be out of reach.
All licensed MMFs operate under Capital Markets Authority oversight, with clear separation between the fund manager, custodian bank, and trustee. This structure has been central in building confidence among conservative savers who previously relied almost exclusively on banks.
Changing perceptions
Another factor behind the shift has been how MMFs are positioned in the market. Over 2025 and into 2026, fund managers and financial educators increasingly described MMFs as savings products rather than complex investments. That language shift has lowered psychological barriers for households seeking alternatives to bank accounts without taking on equity or property risk.
Market trends to watch in 2026
Even as MMFs remain dominant, competition within the unit trust space is increasing. Their share of pooled fund assets fell from about 62.2% in late 2024 to 58.9% by September 2025, as some investors moved capital into Special Funds that posted returns of up to 20.74% in 2025. Still, MMFs continue to attract the largest number of accounts due to their balance of yield and liquidity.
Digital distribution is expected to remain a key growth driver, particularly as minimum investment thresholds stay low and mobile withdrawals become faster.
Top performing MMFs in December 2025
- Cytonn Money Market Fund: 9.57% net return
- Nabo Africa Money Market Fund: 9.45% net return
- Etica Money Market Fund: 9.34% net return
- Enwealth Money Market Fund: 8.96% net return
- Lofty-Corban Money Market Fund: 8.95% net return
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.