Factors influencing the choice of investment options by registered fund managers in Kenya
Chege, Albert Muthinja
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Data compiled by the University of Nairobi (2012) in partnership with twelve other universities worldwide showed that the life expectancy of a Kenyan has increased to 64 years up from 55years in 2010. The life of Kenyans has improved substantially and they can expect to live longer. Therefore there is need to protect individuals and groups against the risks associated with life after retirement when one finds himself without a source of income. An important intervention tool to cater for retirees, at least financially, is the establishment of retirement benefit schemes through which workers can save part of their earnings collectively so that they can benefit from the savings in future when they get out of gainful employment. The retirement benefit schemes operate on the premise that the saved amounts will be available to the beneficiaries when they retire and that the amounts will have increased to cushion them from the adverse effects of inflation and other risks. This can be achieved by properly managing investments of the funds. A big proportion of these pooled funds are managed by registered fund managers. The study focused on investigating the factors influencing the choice of investment options by registered fund managers in Kenya. The fund managers were selected for the study because they have the expertise on investments, that being their core business. The study was guided by three objectives, namely: to find out the influence on choice of investment options, of the expected returns from an investment, the risks associated with an investment and the need to maintain liquidity. The population of study comprised the sixteen registered fund managers in Kenya in 2013 and the descriptive research design was employed. Primary data was used and was collected from the respondents using questionnaires. Analysis of the data was by use of descriptive statistics and inferential statistics, in particular correlation analysis in case of the latter. Results were presented in the form of charts and narrative explanations. The study found out that both the expected return from investments and the liquidity of the investments influence the manager’s choice of investment. The risk of investments do not influence the choice of the investment.