Wealthy Kenyan investors have stepped up investments outside the country with their target being foreign-backed mutual funds.
Standard Chartered Bank head of wealth management, Kenya and East Africa Paul Njoki said the wealthy Kenyans are trying to hedge against risks in the local economy by investing abroad.
Mr Njoki singled out the rising popularity of mutual funds which he noted have gain popularity as an option in diversifying risks abroad for Kenya’s rich especially the ones that invest in the foreign market.
A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.
“While these funds are not risk-free, they offer another avenue for investment and diversification of assets,” said Mr Njoki in interview.
International mutual funds or overseas funds are portfolio of equities, bonds, and money market securities traded in foreign market.
Mr Njoki noted that the funds have gained popularity because of the diversification they offer.
“They offer many benefits such as taking advantage of emerging markets, commodities boom, or business cycle of different markets,” he said.
This is a departure from the past when rich Kenyans have preferred to put their money in real estate, land and bank accounts in foreign capitals. This was mainly done by politicians and businessmen most accused of ripping off the economy. The mutual funds are managed by experts in international markets. Mr Njoki said Standard Chartered had created saving and investing vehicles that the bank’s clients can access with as little as $200 (Sh20,000) per month.
Kenya created 900 dollar millionaires in 2016, according to Knight Frank’s 2017 wealth report pointing to the fact that hard economic times that prevailed in the year did not slow down wealth accumulation.
This took the number of Kenya’s super rich to 9,400 in 2016, representing an eight per cent growth from 2015’s total of 8,500.
The new group of super rich Kenyans includes 30 individuals whose assets are valued at more than $10 million (Sh1 billion)each, 10 ultra-high-net-worth individuals (HNWI) with more than $30 million (Sh3 billion)each and two top dollar millionaires with more than $100 million (Sh10 billion) each.