Kenya’s Money Market Funds Under Pressure as T-Bill Yields Fall—Which Kenyan Money Market Funds Are Most Affected?

Kenya’s money market funds (MMFs) have long been a favored investment vehicle for many Kenyans seeking low-risk, liquid, and relatively high-yield options. These funds primarily invest in government securities such as Treasury bills (T-bills) and Treasury bonds, which traditionally offer attractive returns with minimal risk. However, recent developments in the fixed income market—particularly the decline in Treasury bill returns below 10% in June 2025—have impacted the performance of several MMFs across the country.

This article provides an overview of the current state of Kenya’s money market funds, the effect of falling Treasury bill yields on their returns, and a detailed list of the MMFs affected by this trend.

Understanding Money Market Funds in Kenya

Money Market Funds are collective investment schemes that pool investors’ money to invest in short-term, high-quality debt instruments such as Treasury bills, commercial paper, and certificates of deposit. They are popular due to their:

• Low risk profile: Investments are primarily in government securities and highly rated instruments.
• Liquidity: Investors can access their funds quickly, often within 24 hours.
• Competitive returns: Typically higher than traditional bank savings accounts.
• Accessibility: Low minimum investment thresholds make them attractive to retail investors.

According to the Capital Markets Authority (CMA), MMFs dominate Kenya’s collective investment schemes (CIS), controlling approximately 64.4% of total assets under management (AUM), which stood at KSh 319.7 billion as of March 31, 2025.

Treasury Bill Returns Fall Below 10%: What It Means for MMFs

The Central Bank of Kenya (CBK) released its Treasury bill auction results for June 6, 2025, revealing a notable decline in yields:

T-bill Tenor	June 6, 2025 Yield	Previous Yield
91-day	8.2816%	8.2927%
182-day	8.5433%	8.5642%
364-day	9.9985%	10.00%

This downward trend in T-bill yields directly affects the returns that MMFs can offer investors, as these funds heavily rely on government securities for income generation.

Impacted Money Market Funds: List and Performance

Based on the latest Unit Trust data published on June 9, 2025, several MMFs have daily yields now falling below the 10% benchmark. Below is a list of MMFs affected by the decline in Treasury bill returns, along with their approximate daily yield rates:

Rank	Money Market Fund	Daily Rate (%)
1	ICEA Money Market Fund	9.46
2	African Alliance Money Market Fund	7.60
3	African Alliance Enhanced Money Market Fund	8.17
4	CIC Money Market Fund	9.49
5	CIC Wealth Money Market Fund	7.50
6	CPF Money Market Fund	8.53
7	Mali Money Market Fund	9.62
8	Genghis Money Market Fund	9.88
9	Equity Money Market Fund	5.30
10	Ziidi Money Market Fund	7.13
11	Co-op Money Market Fund	9.49

Source: TUKO.co.ke

Notably, some of the largest and most trusted funds, such as Equity Money Market Fund and Co-op Money Market Fund, have also seen their yields dip below 10%, signaling a broad market impact.

Why Are Treasury Bill Returns Falling?

Several factors have contributed to the decline in Treasury bill yields:

Increased Government Borrowing

The June 6 auction raised KSh 57.4 billion, more than double the target of KSh 24 billion, reflecting high demand for government funding.

Monetary Policy Easing

The Central Bank of Kenya has reduced the benchmark Central Bank Rate (CBR) multiple times since mid-2024, lowering interest rates across the board.

Market Liquidity

High liquidity in the market has pushed yields down as investors accept lower returns for safer assets.

Investor Confidence

The government’s consistent repayment of securities has maintained investor trust, keeping demand for T-bills high despite lower yields.

What This Means for Investors

While MMFs remain a relatively safe investment, the decline in Treasury bill returns means:

• Lower yields: Investors should expect reduced returns compared to previous periods when T-bill rates were above 10%.
• Continued liquidity: MMFs still offer quick access to funds, making them suitable for short-term parking of money.
• Diversification importance: Investors may want to consider diversifying into other fixed income or equity funds for higher returns, balancing risk accordingly.

Top Performing Money Market Funds Despite the Decline

Despite the drop in yields, some MMFs continue to offer competitive returns. According to Business Today’s January 2025 review, the top money market funds with the highest annual percentage yields (APYs) included:

• Cytonn Money Market Fund: 16.61% APY
• Lofty Corban Money Market Fund: 16.26% APY
• GulfCap Money Market Fund: 16.25% APY
• Etica Money Market Fund: 15.90% APY

These funds have managed to maintain strong performance through active portfolio management and diversification within the fixed income space.

Conclusion

Kenya’s money market funds continue to be a cornerstone of conservative investment portfolios, offering liquidity and relatively stable returns. However, the recent fall in Treasury bill returns below 10% in June 2025 has impacted the yields of many MMFs, signaling a shift in the fixed income landscape.

Investors should stay informed about market trends, review their investment goals, and consider diversifying their portfolios to optimize returns while managing risk. Fund managers and financial advisors play a crucial role in guiding investors through these changes.