Fund managers have grown faster than investment banks, recording a faster increase in net assets or shareholders’ funds, as they enjoy a boom from increased inflows into collective investment schemes.
Fund managers ended December 2024 with a higher net asset value of Sh8.5 billion compared to Sh7.6 billion for investment banks, putting them in first place on this measure for the first time in at least five years.
The figures have been disclosed by the Capital Markets Authority (CMA).
The net asset value (NAV) is determined by subtracting an entity’s liabilities from its assets, a telling feature of the firms’ profitability and earnings retention.
A higher NAV is also seen as a measure of a firm’s capital strength in the financial services industry, where stability is highly valued.
However, the NAV of fund managers, who invest capital pooled from a group of investors, is lower than the Sh11.5 billion they recorded in December 2023.
The growth of fund managers has been attributed to the increased appeal of collective investment schemes or unit trusts including their low minimum investment requirements.
“Fund managers have embraced innovations by making investments accessible through technology, this has led to increased awareness leading to the growth of assets under management,” a local fund manager told this publication.
“Furthermore, the minimum ticket for investing in collective investment schemes has also been a key driver of growth. The minimum entry amount is as low as Sh100, which is affordable for the majority of Kenyans.”
Assets under management in collective investment schemes reached Sh316.3 billion at the end of September last year, up from Sh254 billion in June.
The CMA has so far licensed 42 fund managers, including most recently, Myxeno Investment Management Limited, GTXN Investments Limited, VCG Asset Management Limited and the Kenyan Alliance Asset Management Company Limited.
Investment banks are non-deposit taking institutions that advise on offers of securities to the public or a section of the public, corporate financial restructuring, takeovers, mergers, privatisations of companies and underwriting of securities.
The investment banks may also act as stockbrokers, dealers and fund managers of collective investment schemes and as providers of contractual portfolio management services.
The CMA has licensed 17 investment banks, including Sterling Capital, Standard Investment Bank, SBG Securities and Dry Associates.
The capital markets regulator has further licensed nine stockbrokers, 22 investment advisers and 12 non-dealing foreign exchange brokers, which make up other financial intermediaries in the country.
Online forex brokers were the third largest financial intermediary by net asset, ending last year at Sh1.6 billion, while stockbrokers had Sh1.4 billion.
Investment advisers meanwhile ended the year with net assets of Sh483 million from Sh511 million a year earlier.
