
The Safaricom Ziidi Money Market Fund (MMF) has been attracting significant attention due to its perceived lower-than-expected interest rates. However, what may seem like a low return on the surface becomes more understandable when we consider several factors that influence the fund’s performance.
One key reason for the perceived low interest rate is the fundamental nature of money market funds (MMFs). Generally, MMFs are low-risk, low-return investment options that primarily invest in safe, interest-earning instruments such as government securities. While the interest rate may not be as high as those offered by more aggressive funds, like equity or high-risk commodity funds, it is still competitive compared to traditional bank deposit rates. For instance, at over 12% annually, Ziidi’s return offers a better yield than what many local banks provide on savings accounts.
Moreover, when comparing Ziidi to other established funds which offer slightly higher rates, it’s clear that competition plays a role in shaping the interest rates. New entrants like Ziidi may adopt conservative pricing strategies to gain market trust and avoid the risk of over-promising returns early on.
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Ziidi’s fund managers also take a conservative approach to investment, prioritizing lower-risk, and stable assets like short-term debt and government securities. While these assets tend to generate lower returns, they are far less volatile and provide investors with peace of mind. This conservative strategy might explain why the interest rates are lower than those of more aggressive funds, which often invest in riskier assets like stocks or commodities. In 2024, the MansaX shilling fund generated a 19.53% net return, while their dollar fund yielded 12.5%. The Kuza Momentum Fund achieved an impressive 45.86% return. These figures illustrate the principle that higher potential returns often come with increased investment risk.

Additionally, the fund’s management strategy accounts for regulatory and operational costs, which can impact the rate of return. Setting up and managing a new MMF involves significant expenses, including compliance with regulations set by the Capital Markets Authority (CMA). To maintain profitability while covering these costs, Ziidi may choose to offer a more modest interest rate.
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Ziidi’s accessibility also plays a role in its relatively low interest rate. The fund, by targeting a wide range of investors, including the unbanked and underbanked, and allowing entry from as little as Ksh 100, ensures that financial inclusion remains a priority. This broad accessibility may mean that the fund needs to focus more on volume and customer base growth than on offering the highest possible returns.
Furthermore, as a new fund, Ziidi is still in the process of building its asset base. The current interest rate reflects a balancing act between attracting enough investments and gradually increasing returns as the fund matures and accumulates more assets to invest in higher-yield opportunities.
Since its public debut, Ziidi MMF has swiftly gained popularity, attracting over 450,000 customers and accumulating Ksh 2.85 billion in assets. Regulated by the Capital Markets Authority (CMA), the fund is managed by professional fund managers, ensuring transparency and reliability for its growing investor base.