CIC Money Market Fund Records the Largest Market Share, While Cytonn Money Market Fund Records Fastest Growth and Highest Returns
Staff Writer  |  Sep 23, 2019  | 
Cytonn Investments
Staff Writer  |  Sep 23, 2019  |  Cytonn Investments
       


Money Market Funds (MMFs) in the recent past have gained popularity in Kenya with growth rates outperforming that of bank deposits. This much faster growth of MMFs relative to bank deposits may be attributable to the removal of the deposit rate cap floor in August 2018 by the National Assembly that initially required banks to pay at least 70.0% of the Central Bank Rate (CBR) base rate on deposits. The removal of the savings rate control meant that banks were free to price the rate at which they would pay depositors for the use of their funds and thus, investors could no longer enjoy attractive returns from their deposits. With Money Market Funds, in contrast, investors are able to get attractive yields from their investments owing to MMFs having a diversified asset allocation and being actively managed to ensure asset classes with the highest returns are invested in. Under this type of fund, funds are invested in liquid interest-bearing securities that have a weighted average maturity of less than 12-months. These securities include bank deposits and other short-term money market instruments including short-dated treasury bills and commercial papers. The Fund is best suited for investors who require a low-risk investment that offers capital stability, liquidity and a high-income yield.

Summarized performance of Money Market Funds in H1’2019;

  • The Total Assets Under Management (“AUM”) held by Money Market Fund Managers grew at an annualized rate of 23.2% to Kshs 56.5 bn in H1’2019 from Kshs 50.6 bn recorded in FY’2018,
  • CIC Asset Management remains the largest overall Money Market Fund Manager with a market share of 41.4% in H1’2019, up from 39.0% in FY’2018,
  • Cytonn Money Market Fund recorded the strongest annualized growth in AUM of 764.2% to Kshs 302.6 mn as of H1’2019, from an AUM of Kshs 62.8 mn in FY’2018, and,
  • During the period under review, Equity Investment Bank’s Money Market Fund recorded the highest decline of 51.0% (annualized) to Kshs 480.3 mn in H1’2019 from Kshs 644.5 mn in FY’2018.
  1. Top five Money Market Funds by Assets Under Management

The total AUM in Money Market Funds grew by an annualized rate of 23.2% to Kshs 56.5 bn in H1’2019, from Kshs 50.6 bn in FY’2018. The top five Money Market Funds control AUM of Kshs 46.7 bn, which translates to 82.6% of the total AUM in Money Market Funds. The table below shows the top five Money Market Funds as at H1’2019:

Top 5 Money Market Funds by Assets

No.

Fund Managers

FY'2018 Money Market Fund (Kshs Mns)

H1'2019 Money Market Fund

(Kshs Mns)

2019 Market Share

1

CIC Money Market Fund

19,756.68

23,391.36

41.4%

2

ICEA Lion Money Market Fund

5,916.26

6,458.79

11.4%

3

Britam Money Market Fund

5,871.10

6,290.10

11.1%

4

CBA Money Market Fund

4,946.90

5,819.75

10.3%

5

Old Mutual Money Market Fund

4,877.60

4,734.62

8.4%

 

Total

41,368.53

46,694.62

82.6%

  1. Top Five (5) Money Market Funds by Growth Rate

As at the end of H1’2019, the fastest growing money market fund, Cytonn Money Market Fund recorded an annualized growth rate of 764.2% to an AUM of Kshs 302.6 mn, from an AUM of Kshs 62.8 mn in FY’2018. The top five Money Market Funds in terms of growth rate recorded in H1’2019 are as below:

Top 5 Money Market Funds By Growth Rate

No.

Fund Managers

 FY'2018 AUM

(Kshs Mns)

 H1'2019 AUM

(Kshs Mns)

H1'2019 Annualized Growth Rate

1

Cytonn Money Market Fund

62.8

302.6

764.2%

2

Dry Associates Money Market Fund

894.3

1,318.3

94.8%

3

GenCap Hela Imara Fund

305.5

439.0

87.4%

4

Nabo Money Market Fund

237.7

296.1

49.2%

5

Madison Money Market Fund

1,205.0

1,439.8

39.0%

  1. Top Five (5) Money Market Funds by Yield

During the period under review, the following Money Market Funds had the highest average effective annual yield declared:

Top 5 Money Market Funds by Yield

Rank

Money Market Funds

Effective Annual Rate

1

Cytonn Money Market Fund

10.9%

2

Alphafrica Kaisha Money Market Fund

10.9%

3

Nabo Africa Money Market Fund

10.2%

4

Zimele Money Market Fund

9.9%

5

CIC Money Market Fund

9.8%

  1. Comparing annualized Unit Trust Funds AUM Growth with Bank Deposits Growth

Unit Trust Funds assets recorded improved growth of 17.3% in H1’2019, compared to a growth of 4.0% in H1’2018, while bank deposits grew by 11.1% in H1’2019 compared to a growth of 8.3% recorded in H1’2018. Money Market Funds recorded an impressive growth of 23.2% in H1’2019, compared to a growth of 3.8% in H1’2018. This could be attributable to Money Market Funds offering more attractive yields as compared to bank deposits, more so since the scrapping of the rate cap floor in August 2018.

 


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