Has Money Market Fund Returns in Kenya Dropped in 2026?
Money Market Fund Returns in Kenya Drop Again in 2026 — What It Means for Your Money
Published 2026 | Fixed Income Analysis | MoneyMarketHub Kenya
Money Market Fund returns in Kenya are declining again in 2026.
Investors who were earning above 14% in 2024 and early 2025 are now seeing yields trend toward 9–11%.
Average MMF yields have fallen by approximately 3–5 percentage points from their recent highs.
This shift reflects changes in Treasury Bill rates and national monetary policy — not instability in the funds themselves.
Below is a clear, chronological breakdown of what is happening and how smart investors should respond.
Phase One: The High-Yield Environment (2024 – Early 2025)
In 2024, Kenya operated under a tight monetary policy environment.
The Central Bank of Kenya (CBK) raised benchmark rates to stabilize inflation and the currency.
As a result:
- 91-day Treasury Bills traded above 14%
- Short-term government securities paid premium yields
- Money Market Funds captured those high returns
During this period, many MMFs delivered double-digit returns consistently.
Phase Two: Rate Easing Begins (Mid-2025)
As inflation pressures eased, the CBK gradually reduced its policy stance.
Treasury Bill auction results began showing lower accepted yields.
Since MMFs constantly reinvest maturing securities, new investments earned less than older holdings.
That caused the average fund yield to decline steadily.
Lower Treasury Bill yields → Lower reinvestment returns → Gradual decline in MMF performance.
This is normal fixed-income cycle behavior.
2026 Snapshot: Where MMF Yields Stand Now
| Period | Average Gross Yield | Market Environment |
|---|---|---|
| Early 2025 | 12% – 16% | High interest rate cycle |
| Late 2025 | 10% – 12% | Rates easing |
| Early 2026 | 9% – 11% | Lower yield environment |
Returns have not collapsed.
They have adjusted to prevailing economic conditions.
Are MMFs Now Paying Less Than Banks?
This is where context matters.
1. Savings Accounts
Most Kenyan banks offer savings account interest between 2% and 7% annually.
Even after the recent decline, MMFs generally outperform standard savings accounts.
2. Fixed Deposits
Fixed deposit rates currently range between 8% and 10.5%, depending on tenure and institution.
The gap between MMFs and fixed deposits has narrowed.
However, fixed deposits:
- Require lock-in periods
- Penalize early withdrawals
- Limit liquidity
MMFs still provide quicker access and daily accrual.
Regulation and Stability
Money Market Funds in Kenya are regulated collective investment schemes under the Capital Markets Authority (CMA).
Their primary objective remains capital preservation and liquidity.
What Smart Investors Should Do in 2026
Rather than reacting emotionally, investors should adjust strategically.
Step 1: Use MMFs for emergency funds and short-term savings.
Step 2: Compare top-performing funds quarterly.
Step 3: Diversify for growth if seeking higher returns.
For equity alternatives, read:
Best Shares for Beginners in Kenya 2026
For broader market analysis:
Why Banks Dominate the Nairobi Securities Exchange
The Bigger Picture
Kenya is currently operating in a softer interest rate cycle.
As long as Treasury Bill yields remain subdued, MMF returns will reflect that environment.
Smart investing means understanding cycles — not reacting to headlines.
Conclusion
Money Market Fund returns in Kenya have declined in 2026.
The drop is driven by falling Treasury Bill yields and policy adjustments.
MMFs still outperform most savings accounts and remain strong liquidity tools.
The yield advantage over fixed deposits has narrowed — but flexibility remains a key benefit.
In every rate cycle, informed investors adjust allocation rather than panic.
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