What Is a Special Fund? The Definitive Guide to Special Collective Investment Schemes in Kenya

In the evolving landscape of Kenyan finance, a quiet revolution is taking place. While traditional money market funds (MMFs) have long been the go-to for retail savers, a more sophisticated vehicle has taken center stage, the special fund.

As of 2025 Q3, the Assets Under Management (AUM) in Special Collective Investment Schemes (CIS) surged to 137.8 billion Shillings. But what exactly is a special fund, and why is the "smart money" in Nairobi decoupling from standard savings products in favor of special funds?

1. Defining the Special Fund

At its core, a special fund also known as a special collective investment scheme is a regulated investment vehicle that pools capital from investors with a moderate risk profile seeking diversification and higher returns by investing in non-traditional securities .

While a typical MMF is restricted to "safe" bets like treasury bills and bank deposits, a special fund is designed to invest in a wider range of securities like stocks. It has the regulatory "permission" to be aggressive, versatile, and global.

How it differs from a Standard Unit Trust:

• Asset Versatility: Can invest in private equity, derivatives, commodities (Gold/Oil), and global technology stocks.

• Concentration: Unlike retail funds that must diversify across many small pots, a Special Fund can take "high-conviction" positions in specific winning sectors.

2. The Regulatory Framework: CMA Oversight

In Kenya, special funds are strictly governed by the Capital Markets Authority (CMA) under the Capital Markets (Collective Investment Schemes) Regulations.

Key Regulatory Safeguards:

1. The Trustee: An independent bank (e.g., KCB or I&M) acts as the watchdog, ensuring the Fund Manager follows the investment policy.

   
   

2. The Custodian: A separate licensed institution (e.g., banks) holds the actual assets (cash, stocks, gold), meaning the fund manager never physically "touches" your money.

   
   

3. Sophisticated Investor Rule: Under CMA guidelines, these funds are generally reserved for "Sophisticated Investors"—those who understand market risks and typically meet a minimum investment threshold (often starting from KES 1 Million or USD equivalent).

   
   

3. The Advantages: Why HNWIs are Moving to Special Funds

In the 2026 economic climate, three factors have made special funds the "Gold Standard" for wealth preservation:

A. Currency Sovereignty (The USD Hedge)

With the volatility of the Kenya Shilling, holding wealth in a KES-only MMF is a "stealth" loss of purchasing power. Special funds allow investors to hold USD-denominated global assets (like US Treasuries or S&P 500 ETFs) while remaining within a Kenyan regulated vehicle.

B. Market-Neutral Returns

Traditional funds only make money when the market goes up. Special Funds can use long/short strategies, meaning the fund managers can profit even when the markets are dipping.

To outrank a general article, we need to move away from "textbook" definitions and move toward strategic value. In 2026, HNWIs are not just looking for "returns"—they are looking for sophisticated wealth preservation that retail products cannot provide.

Here are the expanded sections for your long-form article, specifically designed to demonstrate deeper insight than the reference material.

C. Unrivaled Diversification Beyond Traditional Assets

While retail funds are often limited to bank deposits and government bonds, special funds break the "local bias." They grant you access to high-conviction, non-traditional securities that are usually inaccessible to individual investors:

• Global Derivatives & Options: Hedging against market volatility.

• Commodities: Real-time exposure to Gold and Energy.

• Concentrated Equity: High-conviction bets on global tech leaders (e.g., NVIDIA, OpenAI-backed ventures) rather than just tracking a sluggish index.

D. Active Institutional-Grade Management

A Special Fund is not a "set-and-forget" product. It is powered by Active Management, where elite fund managers with global pedigree (like the BlackRock-experienced team at Ndovu) perform constant tactical asset allocation. Unlike passive funds that merely follow the market, active managers ensure your capital is always positioned for the highest risk-adjusted yield.

4. Understanding the Risks

While the pursuit of high returns involves different mechanics than a basic savings account, these trade-offs are the engine of the fund's growth. Liquidity is managed through structured redemption windows rather than daily withdrawals, ensuring the fund’s long-term strategy is never compromised by short-term noise. Similarly, investors should expect market-driven movement as the fund pursues 20%–28% returns. These factors are expertly balanced through institutional-grade oversight, ensuring your wealth is steered by experienced hands in a regulated environment.

5. Comparison: MMF vs. Special Fund

Feature	Money Market Fund (MMF)	Ndovu Special Fund (Special CIS)
Target Return	9% - 13%	20% - 28%
Asset Class	T-Bills, Fixed Deposits	Global Stocks, Gold, Derivatives
Risk Level	Low	Medium to High

6. The 2026 Verdict: Is it Time to Level Up?

As the Kenyan market matures, the gap between "saving" and "investing" is widening. Standard unit trusts are excellent for liquidity, but for those seeking to build a legacy and protect wealth against local economic headwinds, the special fund is no longer an alternative, it is a necessity.

Disclosure:

 Ndovu is a regulated Robo-advisory platform operated by Ndovu Wealth Limited (‘NWL’). NWL is a Fund Manager licensed by the Capital Markets Authority (Kenya).

The information provided on this platform and the products and services offered are intended solely for persons in regions and jurisdictions where such distribution and utilization are in accordance with local laws and regulations. Ndovu does not promote its services in regions where it lacks the necessary licenses; It is exclusively available to persons residing in countries where it holds a valid license or has regulated partners. Ndovu does not extend its services to citizens of the United States, Canada, Japan, and other restricted territories.

Disclaimer:

All ETF products are subject to risk, including country/regional, liquidity, and currency risks. Market prices of securities within the ETF may rise and fall, sometimes rapidly and unpredictably.