Treasury Bill Yields Fall Below 10%: The Impact on Kenya’s Money Market Funds

Money Market Funds have increasingly become a favored investment option in Kenya, now representing over 64.4% of all collective investment schemes. Their attractiveness stems from the potential for low-risk, stable returns, primarily linked to government debt instruments like Treasury bills.

Unit Trust managers typically invest a significant portion of these pooled resources in short-term securities to ensure consistent yields. As reported by the Capital Markets Authority (CMA), these funds oversee assets exceeding KSh 319.7 billion, highlighting robust public trust and a rising demand for secure, short-term investment opportunities.

Treasury Bill Auction Results: June 6, 2025

CBK’s T-bill auction held on June 6, 2025, saw a total of KSh 57.4 billion raised—well above the targeted KSh 24 billion.

However, despite the oversubscription, the yields offered fell below the symbolic 10% threshold across all maturities:

This marked a drop from previous rates of 8.2927%, 8.5642%, and 10%, respectively, recorded in the last auction cycle.

Expert Insight: What It Means for MMFs

Financial advisor Alfred Methu highlighted that MMFs are directly affected by movements in T-bill yields due to their investment structure.

“The bulk of MMF portfolios consist of T-bills. So when rates fall, the earnings distributed to MMF investors are also adjusted downwards,” he explained.

He further added that increased financial literacy among Kenyans and volatile market conditions have made MMFs an attractive option.

Especially for conservative investors looking for liquidity and safety.

Funds Posting Sub-10% Daily Returns

With T-bill returns slipping, MMFs have begun reporting reduced yields. Based on data published on June 9, 2025, the following MMFs are now offering daily returns below 10%:

Top Performers Still Holding Strong

Despite the general drop, a few MMFs are maintaining relatively high returns—close to the 10% mark.

Notably, CIC Money Market Fund and Sanlam MMF remain among the top performers in terms of size and returns.

Meanwhile, Safaricom’s Ziidi MMF, launched in December 2024, has rapidly grown to manage over KSh 7.4 billion in assets, capturing a 2.3% market share in less than a year.

What Should Investors Do?

While the current rate dip may cause concern, experts recommend maintaining a long-term view:

• Avoid panic withdrawals – MMFs still offer relatively stable returns compared to riskier investments.

• Compare fund managers – Shop around for the best-performing funds with low management fees.

• Diversify wisely – Consider complementary instruments such as infrastructure bonds or fixed savings accounts.

Conclusion

The decline in Treasury bill returns below 10% has impacted the earnings potential of Kenya’s leading Money Market Funds.

As yields compress, fund managers and investors alike are reassessing strategies to remain competitive and deliver value.

Despite the setback, MMFs remain a cornerstone of Kenya’s investment landscape, offering low-risk avenues for savings and short-term income.