Money Market Funds continue to gain popularity among individuals, given the attractive rate of returns offered by the Money Market Funds and the investors’ preference for capital preservation in times of market volatility. As such, it comes as no surprise when nowadays someone posts, on the various social media platforms, a question, “which is the best money market fund in the market?” Recent data from the Capital Markets Authority indicated that their Market share increased to 88.2% in Q1’2020 from the 87.0% recorded in FY’2019. During the period under review, the total Money Market Funds Assets under Management (AUM) accounted for Kshs 67.4 bn in Q1’2020 of the total Kshs 76.3 bn AUM, an indication of the Money Market Funds popularity in the Kenyan Capital Market. In Kenya, there are 25 licensed Fund Managers by the Capital Markets Authority and at least 18 approved Money Market Funds. With such a large pool of fund managers to choose from, a potential investor needs prudent metrics by which to determine the best fund manager to achieve their investments objectives.
Before delving into the factors to consider when choosing a Fund Manager for your investments, it is important to understand who is a fund manager and what defines a Money Market Fund. To start with, a fund Manager is a market professional who manages and administers a portfolio of securities for and on behalf of investors. The Fund manager achieves this through extensive research and the understanding of the capital markets. On the other hand, a Money Market Fund (MMF) is a collective investment Scheme (CIS) that invests in fixed income short term debt securities such as bank deposits, bills and bonds. These securities are mainly suited for low risk investors who are looking to grow their wealth. MMF investors also enjoy capital preservation on their investments in addition to the competitive returns offered and ample liquidity.
Before investing in a Money Market Fund, it is important to have a comparison matrix by which you judge the best fund manager that will best suit your investments needs. The investment decision making process, for most investors, when evaluating fund managers usually centers on historical performance, recommendations by friends and brand awareness. However, there are other factors which an investor should consider for a favorable investment experience as discussed below;
In conclusion, given the large pool of fund managers to choose from, investors should ensure they have their own yardsticks that ensures that they invest with a fund manager who aligns to their investment objectives. As you choose your money market manager, we further recommend that you need to be keen on questions on the returns offered on your investments, the accessibility of your funds, intervals of sharing statements and the general tech savvy ability of the manager, just to name a few. Happy Investing!
Dennis Kariuki - 1 second ago
Staff Writer - 1 second ago
Solomon Kariuki - 1 second ago
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