Part of our “Diversify” series.

Money market funds are yet another relatively low risk conservative investment available to Kenyans in Diaspora. Money market funds belong to a family called unit trusts and can be loosely compared to mutual funds here in the USA in their most conservative form. They offer more liquidity as compared to treasury bonds, the principal relatively safe, and considered much less risky than stocks.

Money market funds are mostly floated by mainly large insurance companies in addition to commercial banks and is mainly a combination of low risk short-term government securities such as treasury bonds and securities traded at the Nairobi Stock Exchange (NSE) or even offshore securities. Since it easy to liquidate, the money market fund can serve as a place to “park” your money and earn interest while you figure out where to invest it long-term.

Due to high yields in government securities, the return for money market funds has hovered around 8-10% inclusive of 2% typical broker fee charged for most funds. Additionally, since Kenyans in the Diaspora do not have to counter the high inflation rate in Kenya, money market funds offer a better value to them than those in Kenya.

 Some common money market funds are listed below (by no means an exhaustive list).

Recent trends have shown that yields from money market funds have continued to drop, so please talk with your financial adviser or broker to discuss this trend and the long-term prospects of money market funds.

Further Reading

Capital FM article - The Unit Trust Option.

By staff - November 10, 2016
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