treasury bills vs money market funds

If you’re looking for a safe, short-term, and high-yield investment option in Kenya, Money Market Funds (MMFs) continue to perform strongly. They offer competitive returns, daily liquidity, and are an excellent choice for investors who want to preserve capital while earning more than a savings account or most fixed deposits.

As of 6th January 2026, the average MMF yield stands at 9.14% gross (7.77% after tax) — still comfortably above the 4.5% inflation rate (December 2025).

What is a Money Market Fund?

A Money Market Fund is a low-risk investment vehicle regulated by the Capital Markets Authority (CMA). It pools money from investors and invests in secure short-term financial instruments such as Treasury Bills, government bonds, and fixed deposits.

Key Features

• Daily interest accrual – your money compounds every day.
• High liquidity – access your funds in 1–3 days.
• Low risk – backed by government and top-tier financial instruments.
• Affordability – start from as low as KSh 1,000.

Use our Money Market Fund Calculator to estimate your returns.

January 2026 Money Market Fund Rankings in Kenya (As of 6th Jan 2026)

Average Market Return: 9.14% (7.77% after tax)

Net Return is The Annualized Return (Net of Management Fees) Less 15% Withholding Tax.

Key Insights from the January 2026 MMF Performance

1. ArvoCap Takes Top Position

ArvoCap Money Market Fund now leads with a 12.02% yield (10.22% after tax), showing strong performance in the new year.

2. Cytonn Maintains Strong Second Place

Cytonn Money Market Fund holds second position with 11.68% yield, while Nabo remains third with 11.42%.

3. Average Market Return Holds Steady at 9.14%

MMFs continue to comfortably beat:

• Inflation (4.5%)
• 91-Day T-Bill returns (7.7%)
• 182-Day T-Bill returns (7.8%)
• Most fixed deposits

4. Top 10 Funds Deliver Above 10% Gross Yield

Strong performance across multiple funds provides good options for investors, with the top 10 all exceeding 10% returns.

5. Top Funds Outperform 364-Day T-Bills

Top 7 MMFs (12.02% – 10.79%) outperform the 364-Day T-Bill return of 9.2%.

MMFs vs. Other Safe Investments (Jan 2026)

Insight

MMFs not only compete with 364-Day T-Bills but also provide better liquidity and accessibility, making them ideal for:

• Emergency funds
• Business cash flow management
• Short-term savings goals
• Parking funds between investments

How to Choose the Right Money Market Fund

When selecting an MMF, consider:

• After-tax yield – Net returns give the true picture (15% withholding tax applies).
• Fund manager reputation – Stick to CMA-approved and established firms.
• Performance consistency – Check both current and previous week’s yields.
• Liquidity – Confirm withdrawal timelines (usually 1–3 days).
• Minimum investment – Many start from KSh 1,000–5,000.

Final Thoughts

Money Market Funds remain one of Kenya’s top-performing low-risk investments. With inflation at 4.5%, and top MMFs offering 10%+ net returns, they provide a great mix of:

• Safety – Regulated by CMA and invested in government securities
• Liquidity – Quick access to funds when needed
• Growth – Beats inflation and most savings accounts
• Consistency – Daily interest compounding

Whether you’re building an emergency fund, saving for business expenses, or looking for a safe parking place for your money, MMFs offer a smart and stable financial strategy.