Why Kenyan Investors Are Shunning Long-Term Assets - CBK

A new report by the Central Bank of Kenya (CBK) has revealed Kenyans’ preference for short-term collective investment schemes (CIS), such as money market funds (MMFs), over long-term investment assets like equities and balanced funds.

The Financial Sector Stability Report shows that the CIS industry has grown to over Ksh500 billion in assets under management, with MMFs accounting for 62% of the investments.

The CBK noted that the trend was a result of investors’ growing appetite for liquidity, capital preservation, and predictable returns amid economic uncertainty.

Unlike equities or real estate-linked funds, MMFs allow investors to withdraw their money quickly, often within 48 hours, while earning competitive returns with minimal risk.

“The money market and special fund are the most preferred due to lower risks and flexibility in the choices of the investment portfolio. Fixed-income funds are also preferred for their flexibility in investment and income from instruments purchased. 

“The equity and balanced fund are the least preferred even though they generate returns in the longer run and therefore, preferred by investors who have a longer-term perspective of the return on assets,” read the report in part.

Also Read: Top 15 Money Market Funds by Their Net Returns for August 2025

Many investors also prefer investments that allow them to preserve capital while earning modest returns rather than locking their funds in volatile long-term markets.

“The concentration of assets in government securities, fixed deposits, cash, and demand deposits indicates that the CIS have a lower risk appetite, hence preferred as safe assets for capital and liquidity preservation,” CBK added.

Nonetheless, returns for MMFs have continued to fall owing to the reduced interest rates for Treasury Bills. The average net return for MMFs in August was 8.39%, a drop from 8.50% recorded at the end of July.

CBK Concerns on Collective Investment Schemes

Meanwhile, despite the growing popularity of collective investments among Kenyans, CBK cautioned that there needed to be close monitoring of the sector, given the increasing role of non-banking institutions.

"Their increasing scale to almost KSh 0.5 trillion in less than 1 year signifies the emerging role of Non-Bank Financial Institutions that require closer monitoring to mitigate any potential sources of risks to the rest of the financial sector," read the report in part.

"There has been a significant growth in the number of mobile platforms offering retail access to unit trusts, equities, and other capital market products. However, investor protection concerns are rising, particularly around influencer-driven marketing on social media, gamified investment apps, and algorithmic recommendations."