Fund managers face up to Sh339 million in annual regulatory fees as the Capital Markets Authority (CMA) raises the licensing requirements for players in the industry.
The Capital Markets (Licensing Requirements) General Regulations 2025, which are currently before Parliament, propose an annual regulatory fee at 0.05 percent of assets under management (AUM) for unit trusts/collective investment schemes.
The new regulatory fee is higher than the current annual fees, which are set at a flat rate of Sh150,000 per fund manager.
Fund managers will have a 12-month transition period to adhere to the revised requirement upon the adoption of the regulations.
“The annual regulatory fee (for a fund manager) shall be 0.05 percent of assets under management for collective investment schemes subject to a minimum of Sh100,000 and a maximum of Sh15 million,” reads part of the new licensing requirements.
The fresh requirements are expected to raise fund managers’ compliance costs, which are likely to be passed on to investors in the form of higher fees.
The proposals also seek to introduce a 0.01 percent regulatory fee on assets under management for non-collective investment schemes other than pension funds, subject to a maximum of Sh15 million.
The assets of collective investment schemes or unit trusts stood at Sh679.6 billion as of September 2025, implying fees of up to Sh339 million on 0.05 percent of the pooled funds.
The AUM of unit trusts has been on a steady growth curve, rising from Sh316.4 billion in September 2024 and from a lower Sh74.4 billion five years ago in September 2019.
The higher licensing requirement for the fund managers aligns with CMA’s investor protection mandate, as more Kenyans gravitate to the pooled assets for savings and investments.
The number of investors in the various collective investment schemes (CIS) funds has also grown steadily over time, anchored on increased awareness in the market to save and invest, especially after the pandemic, according to the regulator.
Investors in the unit trusts grew from 1.29 million in September 2024 to 2.95 million in September 2025, a 128 percent increase. The investors in unit trusts were only 950,020 as of June 2023.
The CMA attributes the growth in the value of assets in unit trusts to the entry of new players and intense marketing efforts.
“The increase can be attributed to overall growth reported by existing CIS funds as well as additional funds registered by existing umbrella schemes and commenced reporting in 2025. The increase can also be attributed to intensified marketing efforts by the fund managers,” CMA said in its latest quarterly report on CISs.
Fund managers also pay a licensing fee set at Sh100,000 or Sh50,000 for institutions licensed by the Retirement Benefits Authority (RBA).
The application fees of the market intermediary are set at Sh10,000.
Fund managers also face higher capital requirements, with the level of shareholders’ funds being required to stay above Sh20 million, doubling from the current Sh10 million.
New CMA rules further cap cross-investments in other collective investment schemes at 10 percent of AUM.
As of September 2025, there were 55 approved collective investment schemes comprising 234 funds.
Forty-one of the 234 funds were active at the end of the quarter with the most popular type of fund being the money market fund (MMF) which primarily invests in cash and near cash assets like Treasury bills and commercial bank fixed deposits.
