NAIROBI, Kenya Jan 5-Money market funds continued to perform better than all the other asset classes such as equities and real estate infor the second year in a row, a new Cytonn report shows.

The analysts at Cytonn attributed the good performance of the Money market funds to their higher returns as compared to the returns offered by the other asset classes.

“Money market funds offer a good safe haven for investors who wish to switch from a higher risk portfolio to a low risk portfolio, especially in times of uncertainty,” said Cytonn in a statement.

During the period under review, the Cytonn Money Market Fund (CMMF) had the highest effective annual yield of per cent compared to an industry average of per cent.

Notably, the other asset classes recorded improvements from with NASI being the largest gainer having increased by percentage points to a return of per cent, from a decline of per cent inas investors sought to profit from the recovery in stock prices from last year’s lows.

Additionally, the gradual economic recovery following the reopening of the economy contributed to the improvement.

Further, the returns by the various asset classes improved inwith the day, day and day Government papers recording yields of per cent, cytonn investments money market fund, per cent and per cent, respectively, while real estate yield and NASI recorded returns of per cent and per cent respectively.

However, the average returns of the top five Money Market Funds recorded a percentage points decline to per cent in Decemberfrom per cent recorded in December

Inthere was relatively low demand for Treasury-bills auctions as the average subscription rate came in at per cent, down from the cytonn investments money market fund cent subscription rate recorded in

This was due to investors shifting their interest to the bond market in search of higher yields.

On the other hand, primary Treasury-bond auctions in were on a high demand, with the subscription rate averaging per cent, which was higher than the per cent cytonn investments money market fund subscription rate recorded inpartly attributable to the ample liquidity in the money market.

The market preferred the medium-term bonds, in a bid to hedge against duration risk.

“We expect the economic recovery seen in to continue in Additionally, we expect the interest rates environment to remain stable as the government continues to reject expensive bids in the auction market in an effort to keep the rates low,” said Stellah Swakei, a research and investment assistant at Cytonn Investments.

In the year, the Kenyan equities market gained, with NASI, NSE 25 and NSE 20 increasing bycytonn investments money market fund, and per cent, respectively.

The equities market performance during the year was shaped by gains recorded by stocks such as, Equity Group, ABSA Bank Kenya, British American Tobacco Kenya, cytonn investments money market fund, Kenya Commercial Bank and Safaricom Plc.

The gains were however weighed down by losses recorded by banking stocks such Diamond Trust Bank Kenya, Standard Chartered Bank and NCBA Bank.

“We are “neutral” on the equities markets in the short term as the market remained weak in with NASI’s Price to Earnings (P/E) ratio of x trading below its’ historical average of x, and below the most recent peak of x in Aprilshowing that pockets of value still exist.” said Justin Mwangi, an Analyst at Cytonn.

“We believe that investors should reposition towards companies with a strong earnings growth and are trading at discounts to their intrinsic value,” added Mwangi.

As for the real estate sector, it witnessed increased development cytonn investments money market fund with a general improvement in real estate transactions, attributed to the improved business environment.

The reopening of the economy also facilitated numerous expansion and construction activities by investors, in addition to various businesses also resuming full operations, cytonn investments money market fund.

Consequently, the real estate sector grew by per cent in Q2’, percentage points higher than the per cent growth recorded in Q2’, according to the Quarterly GDP Report by the Kenya National Bureau of Statistics.

“We expect the real estate sector performance to increase, cytonn investments money market fund, supported by government’s focus to implement affordable housing projects coupled with the improved investor confidence in the country’s housing market,” said Linah Onyango, a real estate research assistant at Cytonn.

“However, factors such as financial constraints, oversupply in the commercial office and retail sectors, as well as low investor appetite in Real Estate Investments Trusts (REITs) are expected to continue dragging the performance of the sector,” added Onyango.

Cytonn Money Market Fund

A money market fund mainly invests in short-term debt securities with high credit quality such as treasury bills and commercial paper. This fund is ideal for the conservative low-risk investor who leans towards stability and security for capital invested. Interest is calculated on a daily basis, and credited to the client's account net of costs.

Cytonn Money Market Fund (KSH)

Cytonn Money Market Fund (KSH) is a product of Cytonn Asset Managers Limited (CAML), the regulated affiliate cytonn investments money market fund Cytonn Investments Management Plc. CMMF invests in high-quality interest-bearing investments, fixed deposits, and near cash holdings in the Kenyan market. This is your ideal investment option if you are looking to build up your savings or for cash you intend to use to meet your short term goals.

Features of CMMF KES:

• No entry or exit fee is charged.
• Interest earned is compounded on a daily basis.
• Your capital will remain safe.
• You will get competitive rates based on the market.
• For first time investors, this would be the best starting point

You can download the application form here.

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Cytonn Money Market Fund (USD)

Cytonn Money Market Fund (USD) is a product of Cytonn Asset Managers Limited (CAML), the regulated affiliate of Cytonn Investments Management Plc. CMMF (USD) invests in high-quality interest-bearing investments, fixed deposits, cytonn investments money market fund, and near cash holdings in the Kenyan market. This is an ideal investment option for investors who wish to invest directly using the United States Dollar (USD) currency.

Features of CMMF USD:

• No entry or exit fee is charged.
• Interest earned is compounded on a daily basis.
• Your capital will remain safe.
• It provides a stable hedge against depreciation of the Kenyan Shilling.

You can download the application form here.

A money market fund is a type of mutual fund that invests in cash and low-risk, short-term debt securities. Money market funds are considered one of the least risky investment vehicles available, generating income—usually on par with short-term interest rates—that may be either taxable or tax-exempt, depending on the investments held by the fund. Money market funds are highly liquid, and they’re generally used by investors to manage cash or short-term savings.

How Do Money Market Mutual Funds Work?

Like other kinds of mutual funds, money market funds assemble a portfolio of securities and sell shares to investors, cytonn investments money market fund, who earn returns from the portfolio in the form of income and capital gains. Money market funds build portfolios of cash and cash equivalents like bankers’ acceptances, certificates of deposit (CDs), commercial paper, repurchase agreements, cytonn investments money market fund, and U.S. Treasuries.

Generally speaking, there are three main types of money market funds, each of which invests in different kinds of securities. The majority of their investments are in securities, but they also hold cash and cash equivalents.

• Government money market funds buy short-term government Treasuries. These are mostly notes and bills but may also include bonds and repurchase agreements backed by Treasury notes and bills.
• Prime money market funds invest in corporate paper, bankers’ acceptances, short-term corporate notes and bank debt securities.
• Municipal money market funds buy municipal bonds and other debt securities. Earnings are usually exempt from federal income taxes and sometimes also state income taxes.

Some money market funds are designed for retail investors while others are only for institutional investors and require high minimum investments.

Because money market funds invest in debt instruments, they produce regular income that’s either taxable or tax exempt, depending on the type of security creating the income. Traditionally, money funds have aimed for a net asset value (NAV) of $1 per share, and any difference between the NAV share price and the earnings on the portfolio’s investments is distributed to fund investors.

With different word for money maker investments, you run the risk of losing money. Money market funds, however, are widely considered one of the safest, lowest-risk and least volatile investment options.

Money Market Fund Fees

Money market funds cytonn investments money market fund fees in the form of expense ratios. The higher the expense ratio, the lower your returns—and when interest rates are low, expense ratios can really eat into your money market fund earnings.

In fact, recent low interest rates have motivated some companies to waive or reposition fees to maintain a zero or positive yield for their funds. Vanguard, for instance, has temporarily reallocated the expenses of the Vanguard Pennsylvania Municipal Money Market Fund to other funds within Vanguard.

“A year and a half ago, you were seeing money market funds paying over 1%, and now you&#;re seeing them paying almost nothing again,” says Scott Bishop, a certified financial planner (CFP) with STA Wealth Management in Houston. “Everyone right now wants security, they want protection, but they still want income. Some companies are rebating some of these fees because you can’t charge very much on 25 basis points and still pay an interest rate.”

Money Market Fund vs. Money Market Account: What’s the Difference?

Though they share similar names, money market accounts are different from money market funds. Money market accounts are a type of savings account offered by banks and credit unions that may provide better APYs and easier access to your money than conventional savings accounts. Unlike money market funds, money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC). This means you are guaranteed never to lose money as long as the amount is under your bank’s FDIC coverage maximum, generally $, This stands in contrast to money market funds, which are investment products that may lose money over time. That said, you might still opt for money market funds over money market accounts if they offer a substantially higher yield. Because they invest in cash and cash-like securities, money market fund risk is minimal.

Origin of Money Market Accounts

Money market accounts were introduced in the early s to compete with money market funds. Money market funds were established about a decade before to provide more competitive interest rates cytonn investments money market fund bank accounts, whose rates were limited by the Federal Reserve. Because they were investment products, not banking products, money market funds were able to avoid Fed regulation and pay much higher rates of return. By the late s and early 80s, runaway inflation and high interest rates meant that you could earn much better returns in money market funds than in bank savings accounts.

As money began flowing out of the banking system and into money market funds, Congress allowed banks to begin offering money market accounts that offered more attractive interest rates to help banks and credit unions compete with money market funds. Now, cytonn investments money market fund, with the rise of high-yield savings accounts, be sure to compare rates across money market funds, money market accounts, and high-yield savings products to make sure you’re getting the best rate for your money.

Advantages of Money Market Funds

Money market funds are generally considered one of the most stable investments—they experience low volatility and are less prone to market fluctuations. Money funds are also more liquid than other investments with similar returns, cytonn investments money market fund, such as CDs, because they allow you to withdraw cash or buy other investments quickly.

Money cytonn investments money market fund funds are well diversified, and because some funds invest in securities whose interest payments aren’t subject to federal taxes (and sometimes state taxes), they can provide a tax-efficient income source.

Disadvantages of Money Market Funds

Because money market funds are investments and not savings accounts, there’s no guarantee on earnings and there’s even the possibility you might lose money. When interest rates are low, money market rates are also low, earning investors very little. Money market funds are not for long-term investing, and even when interest rates are higher, the money in a money market fund typically won’t outpace inflation.

“I’ve never had a time in my career when a money market fund had an interest rate higher than inflation,” Bishop says. “It’s a very good short-term place to keep money you need to keep liquid, but you will lose money in terms of the cost of the things you buy.”

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Money Market Fund FAQs

‘‘The best time to plant a tree was 20 years ago. The next cytonn investments money market fund time to do so is now.’’ – Chinese proverb.

When you are young, planning for the future can appear unnecessary because, well, cytonn investments money market fund, the future is so far away. However, many of us end up procrastinating until it is too late and retirement finds us unprepared, cytonn investments money market fund. How do we avoid this? Simple; start planning early. Investing is a sure fire way to build yourself a nice nest egg, however, a number of investments can be inaccessible to a majority of the population as they require a large amount of capital. Fortunately, money market funds are a great option for individuals who do not have tons of capital at their disposal.

A money market fund (MMF) is a type of a collective investment scheme that allows investors to pool their resources and invest in instruments that provide higher returns than interest-bearing bank and savings accounts. Money market funds are managed by fund managers, whose expertise and experience benefit the investors. How will a money market fund secure your financial future?

1. Low risk

The goal of planning for your future is to strike a favourable balance between the safety of your principal and generating an adequate return from it. One of the key features of MMFs is that the principal is relatively secure, cytonn investments money market fund. Unlike other investment vehicles such as equities that are typically high risk, a money market fund bears making money consigning clothes risk and thus more secure.

2. High returns

Money market funds generally offer higher returns than interest bearing savings and bank accounts. A MMF compounds your interest daily, meaning you have potential to earn more, cytonn investments money market fund. In Kenya, money market funds such as the Cytonn Money Market Fund offer competitive interest rates.

3. Economies of scale

A money market is by definition a collective cytonn investments money market fund scheme that pools funds from several investors. As a result, it can put money in investments that would otherwise be out of reach for individuals. Thus, they benefit from the economies of scale created, and these advantages in the form of cost savings and attractive returns on investments are passed to the investors.

4. Professional management

Professional fund management relieve investors of the burden of research and decision-making. That then leaves the investors free to concentrate on other pursuits.

5. Liquidity

Money market funds are typically highly liquid. This means that when required, you can get your money within a few business days. While this is one of the many attractive features of money market funds, it could derail your planning for your cytonn investments money market fund future. However, with some discipline, this should not be too big of a problem.

Ranging from the relatively high levels of investment security and rates of return, cytonn investments money market fund, the low investment risk, zero entry fees and benefits of professional management, money market funds are a powerful way to secure your financial future.

Do you have a dream or goal you wish to achieve within a certain timeframe? The Britam Money Market fund will help you plan your financial goals whether it be setting up an emergency fund, saving for school fees, or saving up for a business project. With the fund, you get to earn between %* in interest as you build your savings.

So, what is a Money Market Fund? This is a type of unit trust fund that invests in low-risk investments with an element of stable returns such as fixed deposit cytonn investments money market fund, treasury bills or in a commercial bond. A money market fund invests mainly in fixed income securities with short investment duration and high credit quality.

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*The indicative rate of return shall not be guaranteed and past performance does not guarantee future investment performance. The Indicative Rate is not fixed and may, as such, vary from time to time depending on the investment period and prevailing economic, political or social circumstances. T&C's apply.