A Money Market Fund is a low-risk investment fund that pools money from many investors and puts it into safe, short-term financial instruments like:
- Treasury bills (T-bills)
- Certificates of deposit (CDs)
- Commercial paper (short-term corporate loans)
- Repurchase agreements (repos)
It’s designed to offer stability, liquidity, and modest returns, often slightly higher than a regular savings account.
How It Works Step-by-Step:
- You invest your money in the MMF by buying shares in the fund, just like with mutual funds.
- The fund manager uses that money to invest in a diversified portfolio of short-term, high-quality debt instruments.
- The fund earns interest income from these investments.
- That income is then distributed to you (the investor) as dividends—usually daily or monthly.
- You can withdraw your money anytime without penalties, which makes MMFs highly liquid (easy to access).
Key Features:
| Feature | What It Means |
|---|---|
| 🛡️ Low Risk | MMFs invest in safe instruments, so your money is well protected. |
| 💸 Liquidity | You can usually access your money quickly. |
| 📉 Modest Returns | Returns are better than a savings account, but not as high as stocks or bonds. |
| 📈 NAV (Net Asset Value) | MMFs aim to keep NAV stable at $1 per share (or local currency equivalent), meaning you rarely lose money. |
Who Should Use MMFs?
- People looking for a safe place to park cash for short periods
- Investors who want easy access to funds (emergency fund, business float, etc.)
- Those waiting to move money into other investments
Getting started with a Money Market Fund (MMF) is actually pretty simple! Here’s a step-by-step guide to help you get going—even if you’re brand new to investing.
1. Decide Why You Want to Invest in an MMF
Ask yourself:
- Are you looking for a safe place to keep your savings?
- Do you want to temporarily park money while planning a bigger investment?
- Are you building an emergency fund?
Knowing your goal helps you pick the right fund.
2. Choose Where You Want to Invest
You can invest in an MMF through:
- Your bank (many banks offer MMFs, especially in Kenya or other local markets)
- Investment platforms like:
- CIC Asset Management
- Sanlam Investments
- Britam
- ICEA Lion
- Old Mutual
- NCBA
- Online brokers or apps (e.g. in the US: Vanguard, Fidelity, Charles Schwab)
3. Open an Account
You’ll usually need:
- Your national ID or passport
- A passport photo
- Your KRA PIN (for Kenya)
- Bank details (for deposits and withdrawals)
Many platforms let you open an account online or through mobile apps.
4. Make Your First Deposit
- Minimum deposits vary. In Kenya, it’s often as low as Ksh 100 or 500 to start.
- You can deposit via M-Pesa, bank transfer, or direct debit.
Once your account is set up and funded, your money starts earning interest.
5. Track Your Returns
- You’ll earn daily interest, which is often paid out monthly.
- Some platforms let you reinvest your earnings, so your money keeps growing.
- You can view your statement online or via mobile.
6. Withdraw Anytime
One of the best parts? MMFs are liquid, meaning you can usually withdraw your money within 1–3 business days.
Example: Let’s Say You Invest Ksh 10,000
If the MMF is giving an average 10% annual return, you might earn around:
- Ksh 27 per day (10,000 x 10% ÷ 365)
- That’s Ksh 810 per month, which adds up over time—especially if you keep reinvesting!
Top Money Market Funds in Kenya (2025)
- CIC Money Market Fund
- Average Annual Return: Approximately 10.5%
- Minimum Investment: Ksh 5,000
- Features: Offers competitive returns with a strong track record. Accessible via mobile platforms.
- Sanlam Money Market Fund
- Average Annual Return: Approximately 10.2%
- Minimum Investment: Ksh 2,500
- Features: Provides stable returns with a focus on capital preservation. User-friendly online portal.
- Britam Money Market Fund
- Average Annual Return: Approximately 10.0%
- Minimum Investment: Ksh 1,000
- Features: Known for its accessibility and ease of account setup. Offers mobile app integration.
- ICEA Lion Money Market Fund
- Average Annual Return: Approximately 10.3%
- Minimum Investment: Ksh 500
- Features: Offers one of the lowest entry points, making it ideal for new investors. Provides detailed statements and reports.
- Old Mutual Money Market Fund
- Average Annual Return: Approximately 10.1%
- Minimum Investment: Ksh 1,000
- Features: Backed by a reputable financial institution. Offers both online and offline investment options.
How to Choose the Right MMF for You
When selecting a Money Market Fund, consider the following factors:
- Return Rate: Look for funds with competitive annual returns to maximize your earnings.
- Minimum Investment: Choose a fund that aligns with your initial investment capacity.
- Accessibility: Opt for funds that offer easy account setup and management, preferably with mobile or online platforms.
- Reputation: Consider the fund manager’s track record and the fund’s performance history.
- Liquidity: Ensure the fund allows for easy withdrawal of funds when needed.
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