What Is a Money Market Fund?
Money Market Funds Explained
A Money Market Fund (MMF) is a type of unit trust fund that invests in short-term, low-risk financial instruments like:
- Treasury bills (government debt)
- Commercial paper (corporate short-term debt)
- Bank deposits and certificates
- Repurchase agreements
Because these instruments are short-term and backed by creditworthy institutions, MMFs are considered one of the safest investment options available.
How Do MMFs Make Money?
When you invest in an MMF, your money is pooled with other investors and used to buy these short-term instruments. The interest earned is distributed to investors as daily yield.
Your returns compound daily, meaning you earn interest on your interest — every single day.
MMFs vs Bank Savings Accounts
| Feature | MMF | Savings Account |
|---|---|---|
| Annual return | 10-16% | 1-4% |
| Minimum balance | KES 1,000 | Varies |
| Access | T+1 to T+3 | Instant |
| Insurance | Not KDIC insured | KDIC insured up to KES 500K |
| Tax | 15% WHT | 15% WHT |
The key trade-off: MMFs earn 3-10x more than savings accounts, but withdrawals take 1-3 business days instead of being instant.
How to Get Started
- Compare funds on Yield.co.ke
- Open an account with your chosen fund manager (online, takes 10 minutes)
- Deposit via M-Pesa using the fund's Paybill number
- Watch your money grow — returns are credited daily
Is My Money Safe?
MMFs in Kenya are:
- Regulated by the CMA (Capital Markets Authority)
- Managed by licensed fund managers
- Invested in government securities (largely)
- Audited annually
While not insured by KDIC like bank deposits, no MMF in Kenya has ever lost investor money. The underlying assets (T-bills, bank deposits) are extremely low-risk.
Use Our Calculator
See exactly how much you'd earn with our Net Yield Calculator — it shows your actual profit after the 15% withholding tax and management fees.