Special Investment Funds in Kenya: How They Actually Work

1. What is a Special Fund & Why is it Unique?

At its basic level, a Special Fund is a specialized type of collective investment scheme. This is a regulated financial vehicle where money from various investors is pooled together to create a significant capital base.   

However, unlike a standard Unit Trust (like a typical MMF), a Special Collective Investment Scheme (Special CIS) in Kenya is governed by a more flexible Investment Policy Statement. While traditional funds are often restricted by the Capital Markets Authority (CMA) to "safe" but lower-yielding assets like government treasury bills, a Special Fund is granted the regulatory permission to invest in high yield assets like stocks or commodities. It is designed for investors who have moved past the "emergency fund" phase and are ready to focus on true wealth acceleration.   

2. The Portfolio: Investing in Non-Traditional Investment Securities

The primary driver of the higher returns seen in these funds is the "underlying asset" selection. Traditional funds in Kenya are heavily concentrated in the local stock market (NSE) and government debt. In contrast, a Special Fund ventures into non-traditional investment securities.   

These may include:

• Structured Products: These are investments designed to deliver returns based on something specific, like a currency, interest rate, or market index. They are used to manage risk or enhance returns in a targeted way.

• Private Debt & Equity: This involves lending directly to businesses or investing in private companies. These opportunities can offer higher returns than government securities but usually require a longer commitment.

• Alternative Assets: These are investments outside traditional stocks and bonds, such as gold, global real estate, or fast-growing technology startups. They help diversify a portfolio.   

• Offshore Opportunities: A Special Fund can invest in assets held in foreign currencies like USD or GBP, helping investors protect their wealth from local currency depreciation and access global markets.  

  
  

By diversifying into these non-traditional sectors, the fund breaks the local bias that often limits the growth of traditional savings.   

3. Decoding the "Special Fund Rate"

Investors often ask why the special fund rate is higher than what they see in their bank's fixed deposit. This is not due to luck, but rather the "liquidity premium" and "sophisticated allocation."

• The Liquidity: Many high-yield investment options require a short lock-in period (e.g., 6 to 12 months). Giving the fund more time to invest allows access to opportunities that pay more but take longer to realize.

• Compounding at Scale: As a collective investment scheme, the fund pools capital, allowing it to access institutional-grade opportunities and negotiate terms that are typically unavailable to individual investors.

As of early 2026, while many MMFs are hovering around 11–14%, Special Funds are targeting yields significantly higher, often reaching into the 18–25% range depending on the specific asset mix.

4. Security and Regulation: The Guardrails of Your Wealth

In Kenya, every Special Collective Investment Scheme (Special CIS) must be approved and licensed by the Capital Markets Authority (CMA).   

To ensure your capital is safe, the fund operates on a three-tier "check-and-balance" system:

1. The Fund Manager (e.g., Ndovu): They decide the strategy and make the trades but never actually "touch" your money.

2. The Custodian (e.g., KCB or I&M Bank): A licensed bank that physically holds your cash and assets. They ensure the fund manager is actually buying what they say they are buying.   

3. The Trustee: An independent legal entity that acts as the "watchdog," ensuring the fund is managed strictly according to the laws of Kenya.   

   
   

Summary: Is a Special Fund Right for You?

Understanding how a Special Collective Investment Scheme (Special CIS) in Kenya works reveals that it is a bridge between conservative savings and high-risk trading. It offers the:

• Safety of a regulated environment.

• Growth of non-traditional investment securities.

• Expertise of an active investment strategy.

If you are looking for high-yield investment options that offer more than the "inflation-eroding" rates of a standard bank account, the Special Fund is your next logical step.