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Foreign currency unit trust assets double to Sh71 billion
The CMA attributed the sharp growth in assets under management and investor numbers to concerted marketing efforts through various digital channels by unit trust providers.
The value of foreign currency denominated assets under management in unit trusts doubled to Sh71.3 billion in the year to September 2025 from Sh34.9 billion a year earlier as investors hedged against potential economic shocks by diversifying their portfolios from shilling assets.
The sharp growth was also driven by the larger number of funds that have started offering dollar-linked unit trusts, which offer investors access to offshore bonds and equities assets.
By the end of September, the Capital Markets Authority (CMA) had approved 32 foreign currency funds, up from 25 a year earlier, cutting across the different unit trust options including money market funds, fixed income funds and Shariah funds.
The largest foreign currency fund in the period was the US dollar Sanlam fixed income fund with Sh27.14 billion in assets under management, followed by Standard Investment Bank’s Mansa X special dollar fund at Sh12.69 billion, NCBA dollar fixed income fund at Sh6.99 billion and CIC’s dollar money market fund at Sh4.26 billion.
“Foreign currency denominated funds include dollar, euro and South African rand have continued to grow both in popularity and value in terms of assets under management,” said the CMA in its quarterly collective investment schemes report for the period ending September 2025.
Although the shilling has stabilised at the 129 level against the dollar for the past 16 months, investors remain alive to the potential volatility in the exchange rate affecting the value of their assets, hence the need to diversify the currency exposure.
Before the current stable run, the local currency had depreciated from Sh109 to an all-time low of Sh161 to the dollar over a period of three years until February 2024.
This depreciation sparked an interest in hard currencies and a rush to dollar assets, both from those hedging against future forex losses and those looking for capital gains from their dollar assets.
Dollar-denominated unit trusts that invest offshore also offer investors an easy avenue to holding such assets without the hassle of opening trading accounts in foreign jurisdictions.
Overall, the CMA has reported a rising diversification away from the traditional money market, equities, balanced and fixed income funds by investors, highlighted by the growth in foreign currency and special funds in the last two years.
The assets under special funds climbed to Sh137.8 billion in September, up from Sh70.4 billion in December 2024, underpinning the overall jump in unit trust assets under management by Sh290.4 billion to a record high of Sh679.6 billion in the period.
In the nine-month period, assets under management in fixed income funds rose from Sh66.8 billion to Sh136.8 billion, while those in equity funds assets rose to Sh3.3 billion from Sh2.5 billion. Balanced fund assets meanwhile contracted from Sh2.22 billion to Sh1.7 billion.
The CMA attributed the sharp growth in assets under management and investor numbers to concerted marketing efforts through various digital channels by unit trust providers, whose numbers have also gone up as the regulator continues to licence more players in the industry.
By the end of September, there were 55 approved collective investment schemes —41 of which were active— offering 234 funds.
