Money Market Funds (MMFs) have become a go-to investment option for Kenyans looking to grow their savings with low risk and high liquidity. As we move through 2025, many are wondering just how much they can earn from MMFs this year. Whether you’re saving for a big purchase, building an emergency fund, or simply seeking better returns than a bank savings account, this article breaks down potential earnings, key factors affecting yields, and real-world examples to help you make informed decisions.
Understanding Money Market Funds in Kenya
MMFs are mutual funds that pool money from investors to buy short-term, low-risk securities like Treasury bills, commercial paper, and fixed deposits. Managed by professional fund managers and regulated by the Capital Markets Authority (CMA), they offer daily-calculated interest (yields) that compound over time, typically credited monthly. Unlike bank savings accounts averaging 3-5% annually, MMFs have historically delivered higher returns—often 10-16% in recent years—making them a popular choice amid Kenya’s fluctuating economic landscape.
In 2025, with the Central Bank of Kenya (CBK) benchmark rate at 11.25% (as of December 2024 per Business Today), MMF yields are adjusting to monetary policy shifts, inflation (2.8% in November 2024 per CIC Kenya), and market liquidity. Let’s dive into what you can expect to earn.
Factors Affecting MMF Earnings in 2025
Your returns from MMFs depend on several variables:
- Yield Rates: These fluctuate daily based on the fund’s investments and broader economic conditions. Top MMFs like Cytonn and Lofty-Corban have posted yields of 16.6% and 16.3% in January 2025 (Tuko.co.ke), though rates may dip to 12-14% later in the year due to CBK cuts .
- Investment Amount: The more you invest, the higher your absolute earnings, though the percentage yield remains the same.
- Compounding: Interest is calculated daily and compounded monthly, boosting returns over time if you reinvest earnings.
- Taxes: A 15% withholding tax applies to MMF interest, reducing your net return.
- Fund Performance: Each MMF’s yield varies based on its portfolio and management efficiency.
Calculating Potential Earnings
To estimate your earnings, use this simple formula:
Earnings = Principal × Annual Yield Rate × Time (in years) – 15% Withholding Tax
Here’s how it works with 2025 data:
Example 1: Small Investment (KSh 10,000)
- Fund: Cytonn MMF (16.6% yield as of January 2025)
- Gross Annual Return: KSh 10,000 × 0.166 = KSh 1,660
- Tax (15%): KSh 1,660 × 0.15 = KSh 249
- Net Return: KSh 1,660 – KSh 249 = KSh 1,411
- Monthly Net: KSh 1,411 ÷ 12 ≈ KSh 118
Example 2: Moderate Investment (KSh 100,000)
- Fund: Lofty-Corban MMF (16.3% yield)
- Gross Annual Return: KSh 100,000 × 0.163 = KSh 16,300
- Tax: KSh 16,300 × 0.15 = KSh 2,445
- Net Return: KSh 16,300 – KSh 2,445 = KSh 13,855
- Monthly Net: KSh 13,855 ÷ 12 ≈ KSh 1,155
Example 3: Larger Investment (KSh 1,000,000)
- Fund: Etica MMF (15.9% yield)
- Gross Annual Return: KSh 1,000,000 × 0.159 = KSh 159,000
- Tax: KSh 159,000 × 0.15 = KSh 23,850
- Net Return: KSh 159,000 – KSh 23,850 = KSh 135,150
- Monthly Net: KSh 135,150 ÷ 12 ≈ KSh 11,263
Mid-Year Projection (KSh 100,000 at 13% Yield)
If yields drop to 13% by mid-2025 due to CBK policy shifts:
- Gross Return: KSh 100,000 × 0.13 = KSh 13,000
- Tax: KSh 13,000 × 0.15 = KSh 1,950
- Net Return: KSh 13,000 – KSh 1,950 = KSh 11,050
- Monthly Net: KSh 11,050 ÷ 12 ≈ KSh 921
Top MMFs and Their 2025 Yields
Based on January 2025 data, here are some leading MMFs and their effective annual yields:
- Cytonn MMF: 16.6% (down from 16.8% the prior week)
- Lofty-Corban MMF: 16.3%
- GulfCap MMF: 16.25%
- Etica MMF: 15.9%
- Kuza MMF: 15.4%
- Mali MMF (Safaricom): 15.2%
Lower-tier funds like Stanbic (11.1%) and Equity (7.0%) show the range of returns available. Yields may soften to 12-14% by March, as suggested by X posts, reflecting CBK’s rate cuts and cooling inflation.
Comparing MMFs to Other Options
- Bank Savings Accounts: At 3-5% annually, KSh 100,000 earns KSh 3,000–5,000 gross (KSh 2,550–4,250 net), far below MMFs.
- Treasury Bills: 91-day T-bills yield around 10-11% (CBK data), netting KSh 8,500–9,350 on KSh 100,000, but require a KSh 100,000 minimum and less liquidity.
- Saccos: Some offer 10-12%, but withdrawals are restricted compared to MMFs’ 2-4 day liquidity.
MMFs strike a balance—higher returns than banks, more flexibility than T-bills, and lower risk than stocks.
Maximizing Your Earnings
- Reinvest Interest: Let compounding work its magic. KSh 100,000 at 15% over 5 years grows to KSh 186,585 net, vs. KSh 63,750 if you withdraw interest yearly.
- Top Up Regularly: Add KSh 1,000 monthly to a KSh 10,000 base at 15%; after a year, you’d have KSh 24,947 net (principal + interest).
- Choose High-Yield Funds: Stick to top performers like Cytonn or Lofty-Corban, but monitor daily yields via newspapers or fund websites.
- Start Early: Even KSh 100 (Etica’s minimum) can grow—KSh 100 at 15.9% nets KSh 13.52 annually.
Risks to Consider
- Yield Fluctuations: Rates aren’t fixed; a drop from 16% to 12% cuts KSh 100,000’s net return from KSh 13,600 to KSh 10,200.
- Inflation: If inflation rises above yields (e.g., 15% yield vs. 16% inflation), your purchasing power shrinks.
- No Insurance: Unlike bank deposits (protected up to KSh 500,000 by KDIC), MMFs aren’t insured, though their low-risk assets mitigate this.
In 2025, MMFs in Kenya offer a compelling way to earn 12-16% annually—KSh 1,411 on KSh 10,000, KSh 13,855 on KSh 100,000, or KSh 135,150 on KSh 1,000,000, depending on the fund and market trends. With yields potentially softening mid-year, now’s the time to invest and lock in higher rates. Check daily yields on fund websites like cytonn.com or lofty-corban.co.ke, start with as little as KSh 100, and watch your money grow. Ready to boost your savings? Sign up today and take control of your financial future!
