Benchmarks and Yield of Unit Trusts in Kenya Akama Thaddeus Onyinkwa, Kenyatta University, Kenya
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Date
2025-10
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Publisher
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH - IJARKE
Abstract
Investors expect money market unit trust schemes to deliver above-market financial returns, relying on the expertise of
professional managers. However, many of these schemes struggle to consistently outperform the market, leading to diminished
portfolios and missed investment opportunities. This underperformance can be attributed to various factors, including
inappropriate benchmark selection, inefficient management practices, high operational costs, and potential conflicts of interest
within certain institutional affiliations. To address these challenges, investors should carefully evaluate the performance of unit
trusts against relevant benchmarks, consider the impact of management fees on net returns, and assess the ability of funds to
generate real returns in different inflationary environments. Fund managers may need to reform their operational structures,
enhance investment strategies, and optimize fee structures to improve performance and attract investors. The study aimed to
investigate how benchmarks impact unit trust yields in Kenya. The research was guided by a conceptual framework that
posited relationships between these variables and unit trust yields. The study employed an explanatory research methodology,
utilizing panel data analysis over the period from 2013 to 2022. Data were collected from secondary sources, including Capital
Markets Authority, Central Bank of Kenya, Kenya National Bureau of Statistics, and unit trust performance reports. The
empirical review of existing literature informed the study's hypotheses and provided context for interpreting the results. The
findings revealed that benchmarks significantly influenced the yield of money market unit trusts in Kenya. Money market
funds affiliated with independent institutions and insurance companies exhibited higher yields compared to bank-affiliated
funds. Benchmarks such as bank deposit rates, 182-Day Treasury Bill, and 364-Day Treasury Bill were positively related to
fund yields. Based on these findings, the study recommends that fund managers carefully evaluate their institutional structures
and closely monitor relevant benchmarks. Regulators should ensure fair competition and transparency in the industry, while
investors should consider benchmark performance when selecting money market unit trusts.
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Citation
Akama, T. O., Jagongo, A., & Ndede, F. W. S. (n.d.). Benchmarks and yield of unit trusts in Kenya. IJARKE Humanities & Social Sciences Journal, 8(1), Article 06. https://doi.org/10.32898/ihssj.02/8.1article06