5 Best Special Funds in Kenya: Money Market Fund Alternative

What Exactly Is a Special Fund?

Special funds in Kenya are a type of unit trust or collective investment scheme, regulated by the Capital Markets Authority (CMA). Think of them as flexible cousins to money market funds (MMFs), equity funds, or balanced funds—but with greater power to diversify and seek higher returns.

Unlike traditional funds that invest in specific assets, special funds have the freedom to invest across:

• Local and international bonds
• Kenyan and global equities
• Derivatives like forex, CFDs, and commodities
• Cash, fixed deposits, and even alternative assets

🔍 What Makes Them “Special”?

The name “special” was coined by the CMA to describe their broad investment mandate and tactical strategy. These funds are often:

• Actively managed by top-tier fund managers and dealers
• Flexible in shifting capital based on global and local market changes
• Designed for sophisticated investors who seek diversified growth, not just safety

This makes special funds suitable for medium- to long-term goals, such as building a home, saving for education, or wealth accumulation over 3+ years.

Why You Should Consider Investing in a Special Fund In Kenya

• ✅ Diversification at Its Best

Unlike traditional funds that focus on one type of asset, special funds can invest in a wide array of options, including local bonds, other sovereign bonds internationally, international equities, local equities, and even derivatives and CFDs (forex trade). This diversifies your investment across asset classes and markets, meaning your “eggs are not all in one basket”. This balance safeguards your investment while still allowing for risk-taking.

• ✅ Higher Return Potential

Special funds are designed to seek potentially higher returns than typical money market funds. For example, the Oak Special Fund has an annual target return of 20% per annum, and in the previous year, it even achieved a 29% return after fees. This is significantly higher than the 9-11% often seen in money market funds.

For example:

• Kuza Momentum Fund returned 45.8% in 2024
• OAK Special Fund earned 29.4% net return
  Compare this to average money market funds, which typically return 9–11%.

• ✅ Professional Management

Many Kenyans find it challenging to analyze companies or actively manage their investments due to time constraints. Special funds are actively managed by experienced portfolio managers and dealers who conduct daily analysis and make strategic decisions on your behalf. For example, Oak Special Fund employs about seven dealers who actively manage the fund. This means you don’t need to be an expert in derivatives or commercial papers yourself; the professionals handle it.

• ✅ Ideal for Diaspora Investors

Investment banks like FAIDA and Standard Investment Bank are developing products, such as Hazina, that make it easier for Kenyans in the diaspora to invest in local bonds and benefit from professional management, overcoming common challenges with direct investment like banking access and managing coupons. Additionally, FAIDA is launching a USD-denominated special fund to cater to those who prefer investing in dollars. Mansa X already offers USD-denominated special fund.

• ✅ Suitable for Long-Term Financial Goals

With their potential for higher returns and compounding, special funds are excellent for goal-based investing with a horizon of one to three years or more. This could include saving for children’s education, building a home, or achieving financial independence. Small, consistent contributions can lead to significant growth over time.

🏆 List Of The Best Special Funds in Kenya

Let’s explore the 5 best special funds in Kenya based on returns, entry requirements, and investment strategy:

1. Kuza Momentum Special Fund

• Minimum Investment: KES 100,000
• Top-Up: KES 50,000
• Return (2024): 45.8% net
• Fees: 2% p.a. + 20% performance
• Lock-in: 6 months
• Why Choose It?
  Great for growth-focused investors with lower entry capital. Strong return history with flexible top-ups.

2. Mansa-X Special Fund

• Min Investment: KES 250,000 / USD 2,500
• Top-Up: KES 100,000 / USD 1,000
• Return (2024): ~19–19.5% net
• Fees: 5% p.a. + 10% performance fee
• Lock-in: 6 months
• Why Choose It?
  Global diversification, suitable for USD investors. Excellent for mid-level investors wanting international exposure.

3. OAK Special Fund (Faida)

• Min Investment: KES 500,000
• Top-Up: KES 50,000
• Return (2024): 29.4% net
• Fees: 6% p.a. + 10% performance above 20% target
• Lock-in: 6 months
• Why Choose It?
  High-performing, actively managed, great for aggressive investors aiming for high growth.

4. Old Mutual Special Fixed Income Fund

• Min Investment: KES 1,000,000
• Top-Up: KES 100,000
• Return (2025): ~15.5–13.4%
• Fees: 2% p.a. + VAT
• Lock-in: 6 months
• Why Choose It?
  Best for conservative investors seeking reliable income from bonds and fixed-income assets.

5. Etica Special Wealth Fund

• Min Investment: KES 1,000,000
• Top-Up: KES 500,000
• Return: ~15.8% (Class A)
• Fees:
  • Class A: 1.80%
  • Class B: 1.65%
  • Class C: 1.50%
• Lock-in: 6–12 months
• Why Choose It?
  Lower fees, institutional-grade oversight, and ideal for high-net-worth individuals seeking long-term growth.

📊 Comparison Table of Featured Special Funds In Kenya

Fund	Min Invest	Min Top-Up	Return (2024/25)	Fees (p.a.)	Lock-In
Kuza Momentum	KES 100K	KES 50K	45.8% (2024)	2% + 20% performance	6 months
Mansa-X	KES 250K / USD 2.5K	KES 100K / USD 1K	~19–19.5%	5% + 10% performance	6 months
OAK Fund	KES 500K	KES 50K	29.4% net	6% + 10% performance	6 months
Old Mutual	KES 1M	KES 100K	~13.4–15.5%	2% + VAT	6 months
Etica Wealth	KES 1M	KES 500K	~15.8%	1.5%–1.8%	6–12 months

Points to Consider Before Investing in a Special Funds In Kenya

Special funds in Kenya offer incredible benefits, but they also require a clear understanding of the risks, requirements, and financial discipline needed to succeed.

🧠 Investor Sophistication & Minimum Investment

• By law, investors in special funds are required to be “a little more sophisticated” than those starting with money market funds.
• The legal minimum investment is KSh 100,000. However, some funds, like Oak Special Fund, set their minimum higher, for instance, KSh 500,000, with a top-up minimum of KSh 50,000.

📉 Understanding Risk and Return

• The principle holds: higher potential return often comes with higher risk. While returns are potentially higher than money market funds, they could also be lower.
• You cannot lose all your money due to market fluctuations unless there is fraud, misappropriation, or utter bad management. The fund is diversified across assets (cash, bonds, equities, others), which provides a safeguard.
• For example, Oak Special Fund aims to limit maximum drawdown (loss) to 25% through hedging and diversification strategies.
• Global events do affect performance, but due to active management and diversification, the impact on the overall fund is often mitigated. The strategy is often “in out” (trading over shorter periods) rather than long-term “buy and hold”.

🔒 Lock-In Periods & Liquidity

• Many special funds, like the Oak Special Fund, Kuza Mansa X etc., have a lock-in period, often six months. This period allows the fund managers to invest in instruments that require longer holding times, such as fixed deposits or commercial papers, to maximize returns.
• After the lock-in period, special funds generally offer good liquidity. For example, withdrawals from Oak Special Fund typically take 48 to 72 hours

💰 Personal Financial Preparation

• Emergency Fund: Before investing in a special fund, it’s highly recommended to have an emergency fund (money set aside for 1 to 3 months of expenses). This ensures you don’t need to withdraw from your investment unexpectedly due to unforeseen circumstances.
• Investment Horizon: Have an investment horizon of at least 1 to 3 years to truly see the benefits of compounding and growth.
• Consistency: Be prepared to consistently top up your investment. The real growth and compounding benefits come from regular contributions over time.
• Healthcare Insurance: Ensure your healthcare needs are covered, potentially through an insurance policy, to prevent having to tap into your investments for health-related emergencies.

📋 Fees, Costs & Taxation

• Special funds typically have management fees. For instance, Oak Special Fund has one single fee of 6%, while Mansa X is 5%.
• This fee is higher than what you might find in money market funds (e.g., 2%) because running a special fund requires highly experienced and specialized professionals who command higher remuneration.
• Crucially, the target returns (like Oak’s 20%) are quoted net of these fees. There are no additional withdrawal fees.
• Taxation: The tax (e.g., 15% withholding tax) on special funds is often already paid at source, as the underlying assets (bonds, listed equities, cash in bank) are typically taxed before returns are received by the fund. However, it’s always advisable to consult a tax consultant as individual circumstances vary.

🛡️ Regulation & Investor Protection

• Special funds in Kenya are heavily regulated by the Capital Markets Authority (CMA). The CMA’s role is to ensure transparency, investor protection, and market deepening.
  • Advertisements
  • Valuations
  • Licensing of fund managers
• The CMA licenses professionals, approves products, scrutinizes valuations, and reviews all public advertisements to ensure truthfulness.
• An important disclaimer you’ll find on investment documents, required by law, is that the CMA does not guarantee the financial soundness of the investment. This means if a government defaults on a bond or the market crashes, the CMA isn’t there to reimburse you; their role is to ensure the framework is sound and disclosures are clear.
• Beyond CMA regulation, reputable special funds have internal risk management systems, governance structures, and investment committees.
• An added layer of security: special funds operate with a custodian bank (where your money is held, separate from the fund manager’s operational accounts) and a trustee (who verifies that the fund invests according to its stated policy). This contrasts sharply with hedge funds (often seen in the US), which are very flexible but lightly regulated, not advertised to the public, and require minimum investments upwards of a million dollars, making them distinct from Kenyan special funds.

📉 Market Mindset

• While high bond yields might seem attractive, economists view very high yields (e.g., 17-20%) as a sign of economic strain, making it expensive for the government to borrow. When yields come down (e.g., to 11-12%), it’s actually a positive indicator for the broader economy, making borrowing more affordable and supporting business growth. Always compare your returns to inflation; as long as your returns are above the inflation rate (around 6% long-term average in Kenya), you are beating inflation and growing your wealth.

Where Can I Put My Money to Earn the Most Interest in Kenya?

If you’re looking to maximize interest or return in Kenya, here are your top options ranked by potential yield:

Investment Option	Potential Annual Return	Risk Level	Liquidity
Special Funds (e.g., Kuza, Oak)	20–45%	High	Moderate (6-month lock-in)
Equity Funds	12–25%	High	Medium
Fixed Income Funds	10–13%	Moderate	Medium
Money Market Funds	9–11%	Low	High
Fixed Deposits	6–10%	Low	Low
SACCOs	8–12% (dividends + interest)	Low–Moderate	Medium

For long-term wealth growth, special funds offer the most potential—but they require patience, understanding of risk, and financial discipline.

If you prefer safer and quicker access to your money, consider money market funds or SACCO savings.