For millions of Kenyans, Money Market Funds (MMFs) have become the default home for savings. They are simple, liquid, and relatively predictable, qualities that made them especially attractive during the high interest rate cycle of 2023–2024.
But as Treasury bill yields retreat and inflation risks linger, a growing number of investors are beginning to ask a more ambitious question: what comes after the MMF?
Increasingly, the answer is Special Funds.
According to the Capital Markets Authority’s Q3 2025 data, Kenya’s investment landscape is undergoing a quiet but profound shift.
While MMFs remain dominant, their grip is loosening as investors look beyond capital preservation toward long-term growth, global diversification, and inflation-beating returns.
Kenya’s Investment Market Is Growing and Maturing
By September 2025, Kenya’s Collective Investment Schemes (CIS) industry had reached KSh 679.6 billion in assets under management, up from just KSh 56.6 billion in 2018.
This exponential growth reflects rising financial literacy, fintech-driven access, and a broader willingness among Kenyans to invest beyond bank deposits.
Money Market Funds still account for the largest share, holding KSh 400 billion, or 58.9% of total AUM. However, that dominance is fading. In 2021, MMFs controlled more than 90% of the market. Today, investors are reallocating.
The fastest-growing segment is Special Funds, which reached KSh 137.8 billion, representing 20.3% of total AUM and expanding by 21.5% quarter-on-quarter in Q3 alone. Fixed income funds follow closely at KSh 136.8 billion.
This shift is not accidental, but it is structural.
As Treasury bill rates softened in 2025, the appeal of MMFs weakened. The 91-day T-bill now yields roughly 7.8%, down sharply from 2024 highs that pushed MMF returns into the 14–16% range. With returns compressing, investors are naturally exploring alternatives.
MMFs vs. Special Funds: What Actually Changes?
At a high level, the move from MMFs to Special Funds is about expanding opportunity.
| Feature | Money Market Funds (MMFs) | Special Funds |
|---|---|---|
| Main investments | Treasury bills, bank deposits, short-term paper | Global equities, bonds, real estate, private equity, infrastructure, offshore assets |
| Risk profile | Very low, capital-preservation focused | Medium to higher, market-linked volatility |
| Typical yields (2025) | ~9–12%, declining with T-bill rates | 15–25%+ in strong years (some historically higher) |
| Minimum investment | KSh 1,000–5,000 | Typically KSh 250,000–1,000,000 |
| Liquidity | Daily or near-instant | Monthly or quarterly redemptions; some lock-ins |
| Best suited for | Emergency funds, short-term savings | Long-term wealth building and diversification |
MMFs remain excellent tools for liquidity and stability. Special Funds, by contrast, are designed for investors who can tolerate interim volatility in pursuit of higher real returns over time.
READ ALSO:Why Special Funds Are Quietly Replacing Money Market Funds for Kenyan Savers
Why Special Funds Are Gaining Momentum in 2025
The strongest case for special funds lies in real wealth preservation. While inflation has moderated, the Kenyan shilling remains vulnerable, and domestic assets are increasingly correlated to local macro risks.
Special funds allow investors to gain exposure to global equities, offshore bonds, and alternative assets without opening foreign brokerage accounts or moving money offshore.
Funds such as Mansa X, pioneered by Standard Investment Bank, demonstrated early that globally diversified, multi-asset strategies could deliver consistent mid-teens returns over time.
That success has encouraged new entrants, including Sanlam Multi-Asset Special Fund, XENO International Equity Special Fund (USD), Oak Special Fund, and CIC Global Special Fund, many of which now offer USD-denominated options that hedge currency risk.
Equally important is access. Special funds are quietly democratising investments that were once the preserve of pension funds and institutions, including private credit, structured real estate vehicles, infrastructure projects, and international equity exposure within a regulated CMA framework.
This momentum is visible in the numbers: Special Funds grew faster than every other CIS category in Q3 2025, decisively outpacing MMFs.
When Does It Make Sense to Move Beyond an MMF?
The transition is not about abandoning MMFs altogether. In practice, most investors should layer rather than switch.
Special funds begin to make sense once an investor has built a solid emergency buffer typically six months of expenses parked in an MMF.
They are most appropriate for investors with a medium- to long-term horizon, generally three to five years or more, and for those seeking diversification beyond Kenya’s domestic economy.
For younger professionals, business owners, or diaspora-linked earners holding excess liquidity, special funds can function as the growth engine of a broader portfolio.
The Trade-Offs Investors Must Understand
Special funds are not risk-free. Market corrections can lead to temporary capital losses, liquidity is more constrained, and minimum investment thresholds are meaningfully higher. Redemptions may be monthly or quarterly, and some strategies impose lock-in periods.
These funds reward patience, not panic. Investors must be willing to read offering documents, understand asset allocation, and accept that volatility is the price of higher long-term returns.
With 57 approved collective schemes, rising USD-denominated offerings, and rapidly growing AUM, Kenya’s investment market is evolving, and investor behaviour is evolving with it.
For those ready to move up the risk curve thoughtfully, special funds are no longer niche. They are becoming mainstream.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past performance is not a guarantee of future results. Always consult a licensed financial adviser before investing.
Ronnie Paul is a seasoned writer and analyst with a prolific portfolio of over 1,000 published articles, specialising in fintech, cryptocurrency, climate change, and digital finance at Africa Digest News.
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