Safaricom PLC newly launched investment product; Ziidi Money Market Fund (MMF) is generally low-risk low-return kind of investment. Unlike other products like Equity Fund investing in high-risk assets such as stocks, currencies, commodities among others, Ziidi MMF invest mostly in interest-earning instruments such as government securities.
Ziidi Money Market Fund has accumulated Sh2.85 billion in assets under management and attracted over 450,000 users within its first month of operation.
The unit trust product, managed in partnership with Standard Investment Bank and ALA Capital Limited, allows M-PESA users to earn daily interest on their investments.
A money market fund professionally manages a pool of money from various investors. Depending on how well the scheme is doing given the state of the market, the investors receive interest every day.
The fund operates within M-PESA's existing transaction limits of Sh500,000 daily and Sh250,000 per transaction, representing Safaricom's strategic expansion beyond payment services into investment products.
CEO Peter Ndegwa frames Ziidi MMF as part of the company's broader initiative to promote financial wellness, with SIB Founder James Wangunyu emphasizing the fund's potential to deliver competitive returns while supporting Kenya's financial inclusion goals through the bottom-up economic model.
Safaricom's best chance to grow as the telco business matures is digital finance. Safaricom should fully transform into a CBK-licensed digital bank.
Ziidi is another step toward capital market democratization. Thanks to Safaricom's collaboration & partnerships, money market fund investing is now simple and safe for everyone.
Money market funds (MMFs) are a type of mutual fund that invests in short-term, highly liquid, and low-risk financial instruments.
These funds aim to provide investors with a safe place to invest easily accessible cash-equivalent assets while offering a modest return in the form of interest income. They are ideal for preserving capital and providing liquidity.
Key Features of Money Market Funds.
1. Short-Term Investments.
Investment Horizon: MMFs invest in instruments that typically have maturities of less than one year, such as Treasury bills, commercial papers, and certificates of deposit.
Liquidity: Due to their short-term nature, these investments are highly liquid, allowing investors to access their funds quickly when needed.
2. Low Risk.
Safety of Principal: MMFs focus on capital preservation. The investments they make are generally low-risk, which minimizes the chance of losing the principal amount.
Stable Returns: While the returns are usually modest compared to other investment types, they are relatively stable and predictable.
3. High Liquidity.
Ease of Access: Investors can usually withdraw their money from MMFs quickly and with little or no penalty, making these funds a good option for managing short-term cash needs.
4. Daily Compounding.
MMFs are typically priced daily, allowing investors to know the value of their investments at any given time.
5. Diversification.
Variety of Instruments: MMFs invest in a diverse range of short-term instruments, which helps spread and mitigate risk.
Broad Exposure: By investing in a variety of issuers and sectors, MMFs reduce the impact of any single investment's poor performance on the overall fund.
When selecting a money market fund provider, it's crucial to evaluate several factors to ensure that you select a reputable provider.
Ensure the fund is regulated by a reputable authority such as the Capital Markets Authority (CMA) in Kenya. This provides an additional layer of safety and compliance with industry standards.
Here is the List Of Licensed Money Market Funds In Kenya.
1. Absa Money Market Fund.
2. African Alliance Money Market Fund
3. Apollo Money Market Fund.
4. Arvocap Money Market Fund.
5. Britam Money Market Fund.
6. CIC Money Market Fund.
7. Co-op Money Market Fund.
8. CPF Money Market Fund.
9. Cytonn Money Market Fund.
10. Dry Associates Money Market Fund.
11. Enwealth Money Market Fund.
12. Etica Money Market Fund.
13. Equity Money Market Fund.
14. Faulu Money Market Fund.
15. GenAfrica Money Market Fund.
16. Gencap Hela Imara Money Market Fund.
17. ICEA Lion Money Market Fund.
18. InvestCent Money Market Fund.
19. I&M Money Market Fund.
20. Jubilee Money Market Fund.
21. KCB Money Market Fund.
22. Kuza Money Market Fund.
23. Lofty-Corban Money Market Fund.
24. Madison Money Market Fund.
25. Mali Money Market Fund.
26. Mayfair Money Market Fund.
27. Nabo Money Market Fund.
28. Ndovu Money Market Fund.
29. Old Mutual Money Market Fund.
30. Orient Kasha Money Market Fund.
31. RenCap Money Market Fund.
32. Sanlam Money Market Fund.
33. SC Shilingi Fund.
34. Stanbic Money Market Fund.
35. Ziidi Money Market Fund.
Benefits of Money Market Funds.
1. Capital Preservation: Due to their focus on low-risk instruments, MMFs experience minimal price fluctuations, making them suitable for conservative investors.
2. Liquidity: Investors can easily redeem their investments, providing flexibility to meet unforeseen expenses or take advantage of other investment opportunities.
3. Professional Management: MMFs are managed by professional fund managers who have the expertise to select and manage a portfolio of short-term investments efficiently.
4. Convenience: The fund handles the selection, purchase, and sale of securities, simplifying the investment process for individuals.
