Investors also have an option of mutual funds to take advantage of compounded returns over a long period of investment. Mutual funds also offer investors flexibility in terms of modes of investment and withdrawal.įor instance, Investors can opt for different investment modes like systematic investment plans, systematic transfer plans, systematic withdrawal plans, switches from one scheme to another and many others.
Mutual funds offer investors a variety of products to suit their risk profiles and investment objectives.Īpart from equity funds, there are also balanced funds, monthly income plans, income funds, and liquid funds to suit different investment requirements. Since mutual funds buy and sell securities in large volumes, transaction costs on a per-unit basis are much lower than what retail investors may incur if they buy or sell shares through stockbrokers.
BEST PERFORMING MUTUAL FUNDS 2020 PROFESSIONAL
Mutual funds are managed by professional fund managers who have sufficient expertise and experience in picking the right stocks to get the best risk-adjusted returns. Investing in the stock market requires a lot of experience and expertise.
Since mutual funds work based on pooling of money, mutual fund investors can have the beneficial ownership of a diversified portfolio of stocks with a much smaller capital outlay. Investors require a large capital outlay to build a diversified portfolio of stocks. Mutual funds help investors diversify unsystematic risks by investing in a diversified portfolio of stocks across different sectors. On the other hand, even if the company performs well, the stock price may still fall, if the market falls. See also: Unit trusts in Kenya Benefits of Investing in Mutual Funds in Kenya Risk diversificationĮvery stock is subject to three types of risks, for example, market risk, company risk, and sector risk.Ĭompany risk and sector risk are unsystematic risks, while the market risk is known as a systematic risk this means, the stock price is not dependent on the market price the prices may fall if a company performs poorly. The rates vary with stock markets but sometimes go as high as 20% per annum.Ī balanced fund is ideal for long-term goals such as retirement investments, or long-term education investments. There is an equal chance of making losses as well as reap highly from the investment. The price of the units solely depends on the performance of the balanced fund depending on the stock market.īalanced funds are generally medium to high risk. They operate as trading units, and you invest by buying a unit in the fund, and you realize the gains by selling them at a price that is higher than your buying price. They invest in a combination of traded stocks and government bonds without necessarily investing in a pooled fund.
These funds are a mix of both the money market and dividend funds in that. They comprise of government instruments, money markets, and commercial papers, publicly-traded stocks with an excellent record of paying dividends, money markets and moderate risk corporate bonds. They are highly suited for medium-term savings and investments. Britam Money Market Fund – The Britam Money Market Fund, seeks to provide investors with a competitive interest rate and capital preservation in the short termĭividend funds are medium-risk investments with a moderate returns rate of about 12 to 15%.Zimele Market Fund – Zimele money market fund or Zimele savings plan is licenced and regulated by the Money markets Authority.CIC Money Market – The CIC Money Market fund is a low-risk fund which invests in diversified near cash, interest-bearing instruments in the Kenyan market.CMMF invests in high-quality interest-bearing investments, fixed deposits, and near cash holdings in the Kenyan market. Cytonn Money Market Fund – CMMF by Cytonn Asset Managers Limited (CAML), the regulated affiliate of Cytonn Investments Management Plc.Money market funds are naturally low risk and are best suited for accumulating savings for investments, emergency funds and other no monthly expenses such as insurance or school fees. The funds offer high liquidity of between 4% and 10% annually depending on the fund manager with very minimal risks incurred.
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