Kenya’s Capital Markets Authority (CMA) is considering introducing investment ratings for unit trust funds and their managers as the country’s collective investment schemes market approaches KSh1 trillion in assets under management. The proposal aims to help investors better understand investment risks and compare financial products beyond their advertised returns.
As of 30 June 2026, Kenya’s collective investment schemes held KSh948.7 billion in assets under management across 66 approved schemes comprising 320 funds. The reported investor count had reached 4.14 million, reflecting the growing role of unit trusts, particularly money market funds, in the country’s retail investment market.
CMA chief executive Wycliffe Shamiah said the regulator frequently receives enquiries from investors seeking to determine whether particular funds are safe or offer better investment prospects. He said independent ratings could help address these concerns by providing an additional assessment of information disclosed by fund managers.
The proposal comes amid rapid growth in the industry. Assets under management increased from KSh56.6 billion in March 2018 to KSh948.7 billion in June 2026. Over a separate period, the reported investor count rose from 171,904 in March 2021 to 4.14 million in June 2026.
The proposed framework would assess both the risks associated with individual funds and the capabilities of the companies managing them. Fund ratings could examine underlying asset quality, borrower default risk, return fluctuations, foreign-currency exposure and liquidity, including a fund’s ability to meet withdrawal requests.
Manager ratings would focus on investment processes, internal systems, personnel, governance and the experience of senior management and investment teams. Special Funds could require additional scrutiny because their mandates may involve concentrated investments, complex assets or borrowing that can magnify losses.
The CMA has also cautioned some fund managers over the marketing of unrealistic returns. Ratings could provide another reference point for investors evaluating investment claims, helping them distinguish historical performance from the risks associated with a portfolio. However, ratings would not guarantee returns or eliminate the possibility of losses.
The expansion of specialised investment products has added complexity to the market. Absa secured approval for global multi-asset Special Funds denominated in Kenyan shillings and US dollars in August 2026, while Britam launched funds targeting global equities and multi-asset exposure in October. These products offer wider investment opportunities but can introduce foreign-market, currency and concentration risks.
Digital distribution is also widening access. Safaricom launched its Sharia-compliant Ziidi Shari’ah money market fund on M-Pesa in October, bringing another regulated investment product to a familiar mobile platform. The growing accessibility of investment products has increased the importance of clear information that helps users understand their potential risks.
Agusto & Co, a pan-African credit rating agency, supports the development of fund and investment manager ratings in Kenya. Its group managing director, Yinka Adelekan, said such assessments could improve transparency and help investors make better-informed decisions. The Fund Managers Association has also welcomed the proposal, describing ratings as a complement to professional due diligence rather than a replacement for fund managers’ responsibilities.
The CMA is examining international approaches as it considers the framework. Nigeria provides a regional example of a market requiring ratings for money market funds, with additional obligations for managers of specialised funds. The United States and European Union take different approaches, relying on regulatory requirements for investment quality, portfolio management and disclosures rather than a universal external-rating mandate for every unit trust.
Kenya will need to determine whether ratings should be compulsory across the market or introduced on a voluntary basis. A mandatory approach could provide wider coverage, while a voluntary system would give managers more discretion but could leave investors without consistent assessments across all funds. The cost of obtaining ratings will also matter, particularly if expenses are passed on to investors through fund charges.
With assets under management approaching KSh1 trillion and millions of reported investors participating in collective investment schemes, the CMA’s proposal seeks to make investment risks easier to assess. Its effectiveness will depend on the independence of rating agencies, the quality of available information and whether assessments are accessible and comparable for ordinary savers.
