With rising costs and uncertain times, managing your money wisely is more important than ever. Whether you’re building an emergency fund, a sinking fund, saving for school fees, or simply looking to beat inflation, Money Market Funds (MMFs) offer a low-risk, high-access way to grow your money in Kenya.
What is a Money Market Fund?
A Money Market Fund is a type of unit trust that invests in short-term, low-risk financial instruments such as:
- Treasury bills (T-bills)
- Fixed deposit accounts
- Government bonds (short maturity)
- Call deposits & commercial papers
Your money is professionally managed and earns interest daily. The interest is then compounded monthly and accessible when you need it.
Why Are MMFs Popular in Kenya?
Money market funds are mostly popular because of their high liquidity.
MMFs have become increasingly popular among:
- Young professionals seeking better returns than bank savings
- SME owners managing idle capital
- Savers looking for low-risk investments
- Parents saving for school fees or emergencies
Key Benefits of MMFs in Kenya
1. Higher Returns
MMFs offer returns between 8%–12% p.a., significantly better than most savings accounts. What to note though is that their interest rates fluctuate daily as they mostly depend on the market perfomance of the underlying assets.
2. Liquidity
You can withdraw within 2–5 working days. This is much faster than other investment options. Some fund managers allow for instant withdrawals up to certain limits(for example ICEA LION, allows instant withdrawal of up to ksh 10,000 in a day.
3. Low Risk
Funds are invested in stable government-backed securities, making them very low risk. It is considered as a capital preservation platform.
4. Daily Compounding
Interest is calculated daily and credited monthly for most fund managers. But other fund managers like ZIIDI from Safaricom credits interests earned daily.
5. Affordable Entry
You can start investing with as little as Ksh 100 for some funds. Subsequent deposits are also low..
📈 How Do MMF Returns Work?
Most MMFs declare a daily yield and annual yield. For example, a 10% annual return is equal to approximately 0.027% return per day. This is calculated on your balance daily and compounded monthly. But there is a consideration for a 15% withholding tax on the interest earned. Some fund managers also deduct management fee from the rate declared.
Example: If you invest Ksh 1,000,000 at 10% p.a., you'll earn around Ksh 7083.33 per month(net) and over Ksh 84,000+ in a year all factors remaining constant especially the rate.Top Money Market Fund Providers in Kenya (2025)
| Fund Manager | Min. Investment | Highlights |
|---|---|---|
| CIC MMF | Ksh 500 | Daily interest, easy M-Pesa access |
| Sanlam MMF | Ksh 2,500 | Trusted manager, regulated |
| NCBA MMF | Ksh 5,000 | Online portal, support |
| ICEA Lion MMF | Ksh 500 | SMS alerts, good interface |
| Zimele Savings Fund | Ksh 100 | Low entry, flexible savings |
Key Considerations Before You Invest in any MMF
- Ensure that the fund manager is licensed by the Capital Markets Authority (CMA)
- Review past performance (consistency matters)
- Understand withdrawal terms
- Look out for hidden fees
- Check support and ease of deposits
Are MMFs Risk-Free?
While very low-risk, MMFs are not completely risk-free. Main risks include:
- Interest rate risk: Return drops with falling interest rates
- Inflation: If inflation outpaces MMF returns, real value may decline
- Management risk: Poor fund management (rare with licensed firms)
How to Start Investing in an MMF
- Choose a licensed fund
- Open an account (online, in person, or via app)
- Fund your account (via M-Pesa or bank)
- Track your returns (SMS, app, or email)
- Withdraw when needed
Final Thoughts
Money Market Funds are a smart, low-risk, and high-access way to grow your money in Kenya. Whether you're new to investing or want a better place to store your cash, MMFs deserve serious consideration.
Would you Want Personalized Help?
At Laren, we help individuals, freelancers, and businesses choose the best financial tools including MMFs, insurance, and investment planning.
Contact us for a free consultation or explore our financial planning services.