There are many investment options available in the market, locally and internationally; what you choose to invest in largely depends on the amount you would like to invest, the goal of this investment, the time horizon and your appetite for risk- all investments have an element of risk attached to them. A Money Market Fund is a type of Unit Trust Fund which is considered to be the least risky because your capital (initial investment and any additional top ups) is guarded from loss. This makes a Money Market Fund attractive to you if you’re a conservative investor.


Although the returns are lower than other Unit Trust Funds, they are quite modest because they are derived using compound interest, which Albert Einstein referred to as the 8th Wonder of the World. Why, you may ask? Well, simply because each shilling that is invested starts “working for you” on the daily- think of it like earning interest on top of your interest.


Your next question might be, what is a Unit Trust Fund? Well, it is a type of investment where people with common savings and investment goals join a collective investment scheme that is managed by a professional investment/fund manager. The key advantage of this arrangement is that all investors, big or small benefit from the economies of scale that the pooled funds provide. In Kenya, Unit Trusts are regulated by the Capital Markets Authority (CMA).


The money pooled in a money market fund is invested in highly liquid, near-term instruments or interest-bearing securities that have a maturity of less than 12-months. Below we will take you through a few of the interest-bearing securities that we at ICEA LION invest in:


Government securities:

These are instruments through which the public loans money to the government to fund projects such as infrastructure. They are typically considered risk-free. There are two types:

  1. i) Treasury bills, short-term with maturities (pay outs) of 91 days, 182 and 364 days. Typically, if you were to invest in these as an individual the minimum amount required for you to invest would be KES 100,000 through the central bank or commercial/investment banks.
  2. ii) Treasury bonds, which are medium to long term with a maturity period of between 12 to 30 years. If you are to invest in these as an individual, you would require a minimum of KES 50,000. Investors receive payments every 6 months and at maturity of the bond, they are paid the face value.


When you invest in a Money Market Fund, a portion is dedicated to these investments therefore you are able to enjoy the benefits of  diversity and the economies of scale without having to invest a lump sum and ease of access to your funds when you need them


Commercial paper:

These are unsecured short-term debt instruments, issued by large corporations to finance short-term cash-flow needs such as payroll and inventories. They are referred to as unsecured because they are backed by a promise by a bank or issuing firm to pay back the face value at the specified maturity date. Maturities on commercial paper are negotiated and are rarely for longer than 270 days.


Fixed Deposits

These are financial instruments provided by commercial banks which lock your money for a fixed period, usually 6 -12 months at a specific interest rate. They are considered a better investment to have than investing your money in a savings account which has a lower return on investment. Investing in a Fixed Deposit in Kenya usually requires a large amount of capital, at least KES 100,000 which earns simple interest. Putting your money in a Money Market Fund still gives you access to this investment and more at an affordable price and earns you compound interest


Call deposits: These are bank accounts that provide for instant access to investment funds whilst earning interest.


Money market funds are highly liquid and are considered a good way to setup an emergency fund or save up for short to medium term goals such as school fees, weddings, moving houses among others.


There are several unit trust schemes licensed by the Capital Markets Authority in Kenya, offering you options. When deciding who to invest with, it is good to consider the firm’s stability, professionalism, and reliability. Features such as access to online tools and customer experience track record are also important considerations


To start a Money Market Fund with ICEA LION. Visit INVEST.ICEALION.COM or dial *793# to start investing with us. With as little as KES 500 and in 4 easy steps you can become a Money Market Fund investor today!