Fund Characteristics and Financial Performance of Collective Investment Schemes in Kenya
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Date
2023
Authors
Kalekye, S. Ndanu
Gatauwa, James M.
Journal Title
Journal ISSN
Volume Title
Publisher
IAJEF
Abstract
A collective investment scheme is a plan
where many investors who share the same
financial goal pool together funds and appoint
a professional manager of these funds to do
the investment on their behalf at a fee. This
makes investment in collective investment
schemes more cost effective in accessing a
several shares/ equity, bonds, fixed deposits
and treasury bills. Managing performance of
collective investment schemes involves use
financial ratios such as profitability ratios and
leverage ratios. The general objective of this
research project was to determine the effect
fund characteristics on the financial
performance of collective investment
schemes in Kenya. The specific goals of the
study were; to investigate the impact of that
institutional factors, investment strategy, the
regulatory framework and lastly to the scheme
products on the performance of collective
investment schemes in Kenya financially. The
study was grounded on theories such as: the
Capital Asset Pricing Model (CAPM), the
Keynesian Theory, the Arbitrage Pricing
Theory (APT) and the Theory of Financial
Deepening. The researcher used secondary
data in the study and the 21 Nairobi based
CISs constituted the target population.
Because of the small CIS population, Census
was used in the study. The stata method was
also used by the researcher in the analysis of
data. Diagnostic tests and panel data modeling
was carried out simultaneously.
The study took ethical considerations into
account. Study findings will bridge the
knowledge gap and also make an
improvement on the academic reference
material on performance of Kenyan CIS. This
study also expanded the available empirical
evidence by using return on investment (ROI)
metric as measure of the CIS performance. It
concluded that institutional factors have a
significant effect on return on investment
(ROI), the findings further showed that
scheme products had an effect on the CIS
performance. The study concentrated on
Collective investment schemes in Kenya
which operated between 2018 and 2022, a
period during which possibly some CISs that
either had not existed or were just starting up
leading to unbalanced panels being generated.
Secondary data that was used could also have
resulted into undetected errors. The research
suggested that further studies can be done
focusing on examining the effect of funds
characteristics on other institutions within the
capital markets in Kenya. This will help in
improving the available knowledge on the
elements that promote returns on investments
of new players in the country’s finance
industry.
Description
Article
Keywords
Institutional Factors, Regulatory Framework, Investment Strategy, Schemes Products, Fund Characteristics
Citation
Ndanu, K. S., & Gatauwa, J. M. (2023). Fund characteristics and financial performance of collective investment schemes in Kenya. International Academic Journal of Economics and Finance, 3(10), 118-133.