For more than a decade, Money Market Funds (MMFs) have been the default destination for Kenyan savings.
They offered exactly what most households wanted: capital preservation, daily liquidity, and returns that comfortably beat bank deposits. But beneath the surface of Kenya’s fast-growing investment market, a quiet reallocation is underway.
As of September 2025, Kenya’s Collective Investment Schemes (CIS) industry stood at Sh679.6 billion in assets under management, according to Capital Markets Authority data. Money Market Funds still dominate, holding roughly 59% of total AUM, or about Sh400 billion.
Yet that dominance has steadily eroded from over 90% in 2021, while Special Funds have expanded to 20.3% of the market, becoming the fastest-growing CIS category.
This shift is not a rejection of MMFs. It is a sign that Kenya’s investor base is maturing, moving from pure capital preservation toward diversification, real return protection, and selective risk-taking.
A Market That Has Outgrown One Product
Kenya’s CIS industry has grown more than elevenfold since 2018, driven by mobile distribution, rising financial literacy, and prolonged macroeconomic volatility.
In Q3 2025 alone, total CIS assets rose 14% quarter-on-quarter, underscoring continued inflows even as interest rates softened.
Within that growth, the composition is changing. Money Market Funds remain essential, but incremental capital is increasingly flowing elsewhere.
Special Funds now controls Sh137.8 billion, driven by flagship products such as Mansa X, which manages approximately Sh87 billion in its Kenya-shilling tranche alone, making it one of the largest single investment funds in the country.
Regulators have played a role in this evolution. The CMA approved eight new schemes in November 2025, bringing the total number of licensed CIS to 57.
Many of the newer approvals sit squarely within the Special Funds category, reflecting regulatory comfort with more flexible, multi-asset mandates.
How Special Funds Differ From Money Market Funds
At a structural level, the difference between MMFs and Special Funds is not simply risk but mandate.
| Feature | Money Market Funds (MMFs) | Special Funds |
|---|---|---|
| Primary investments | Treasury bills, bank deposits, short-term securities | Global equities, bonds, commodities, currencies, derivatives, real estate, private equity |
| Risk profile | Low, capital-preservation focused | Medium to higher, often with hedging strategies |
| Typical returns (2025 trend) | ~9–13% p.a., declining with T-bill yields | 15–29%+ in strong periods |
| Liquidity | Daily or near-instant | Quarterly or notice-based (gradually improving) |
| Minimum investment | As low as Sh100–Sh5,000 | Typically Sh500,000–Sh1 million |
| Best suited for | Emergency funds, short-term savings | Long-term growth and inflation hedging |
| Currency options | Mostly KES | KES and USD options increasingly common |
MMFs thrived during the high-rate cycle, when Treasury bills yielded double digits and liquidity was king. By late 2025, however, the 364-day T-bill averaged closer to 10–11%, compressing net MMF returns into the 9–12% range.
While still attractive for safety, they are no longer sufficient for investors seeking to grow purchasing power over time.
Special Funds, by contrast, employ active strategies, often long/short, global, or multi-asset, designed to outperform cash over a full market cycle rather than track local interest rates.
READ ALSO:How Special Funds Became Kenya’s New Money-Market Killer
Why More Kenyans Are Making the Shift
The primary driver is real returns. Inflation may have moderated, but currency volatility remains a persistent concern. Concentration in local fixed income increasingly exposes savers to a single macro outcome.
Special Funds provide offshore diversification with exposure to global equities, commodities, and foreign currency assets without the operational stress of opening foreign brokerage accounts.
Funds such as Mansa X, launched in 2019 as Kenya’s first Special Fund, demonstrated early that sophisticated global strategies could be delivered within a local regulatory framework.
Its consistent performance through volatile periods catalysed both investor confidence and competitive entry.
Newer funds, including Oak Special Fund, Sanlam Multi-Asset Special Fund, and offerings from XENO, Britam, ALA Capital, and CIC, have expanded choice.
The growing availability of USD-denominated tranches has further strengthened the appeal, particularly for diaspora-linked savers and those hedging against shilling weakness.
Equally important is access. While minimum investments remain higher than MMFs, Special Funds dramatically lower the barrier to strategies that were once reserved for pension funds and institutions.
For middle-income professionals, entrepreneurs, and long-term savers, they represent a bridge between basic savings products and institutional-grade investing.
This Is Not a Wholesale Replacement
Despite the headline trend, MMFs are not disappearing and should not. They remain unmatched for liquidity management, emergency reserves, and short-term parking of cash. What is changing is portfolio construction.
Increasingly, investors are splitting roles: MMFs for liquidity and safety and Special Funds for growth and diversification. This layered approach reflects a more sophisticated understanding of risk rather than a search for yield alone.
The Risks That Must Be Acknowledged
Special Funds are not suitable for all investors. Returns can be volatile, drawdowns are possible, and liquidity is not immediate.
Many funds also charge performance fees, which require careful evaluation. These products reward patience and discipline, typically over horizons of three years or longer.
As with any investment, reading the prospectus, understanding the strategy, and aligning with personal risk tolerance is essential.
A Quiet but Structural Shift
What is unfolding is not a speculative frenzy but a structural rebalancing. As Kenya’s CIS market crosses Sh600–700 billion, investor behaviour is evolving alongside it. Money Market Funds remain foundational, but they are no longer the final destination for surplus capital.
For savers willing to accept measured risk in pursuit of long-term growth, Special Funds are emerging as the next logical step and, increasingly, a permanent allocation rather than a tactical experiment.
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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