Fund managers grew investments in offshore assets such as foreign company stocks, gold, and exchange-traded funds (ETFs) by more than two-fold due to higher returns and ease of entry and exit.
The value of assets sunk into listed offshore securities by collective investment schemes soared by 161.1 percent in three months to June 2025 to reach Sh50.2 billion, up from Sh19.2 billion in March, according to data from the Capital Markets Authority (CMA).
Offshore investments are the fourth most popular asset class for fund managers who oversee investments on behalf of the nearly 2.5 million Kenyans invested in unit trusts.
The push towards offshore investments has seen the rise of multi-asset special funds, which focus mainly on the asset class.
“Offshore markets are more liquid and can accommodate bigger ticket trades than local markets,” said Etica Capital co-founder Kenneth Maina.
“There has been an increase in the number of multi-asset special funds with a focus on offshore investments as fund managers look for returns in the global markets, hence the increase in offshore allocations for collective investment schemes.”
Fund managers have deemed local equities illiquid, with only a few highly traded counters, even as the ongoing market recovery presents opportunities in the Nairobi Securities Exchange (NSE).
The number of licensed offshore funds by the CMA has been on the rise over recent months, signalling the underlying drive for offshore investments.
In the quarter ended June, the CMA approved the establishment of Kibaba Special Multi-Asset funds, ALA Multi-Asset Special Fund, and the VCG Offshore Opportunities Special Funds Umbrella.
Offshore listed investments make about eight percent of unit trusts’ assets but remain behind three other classes, including fixed and demand deposits & cash.
Treasury bills and bonds remain the most popular asset class with an asset base of Sh244.1 billion or a 41 percent proportion.
The securities issued by the government remain favoured due to their low-risk status.
“Fund managers have the objective of attaining capital preservation and therefore tend to allocate more assets to Treasury instruments,” added Maina.
Fund managers invest in other asset classes, including unlisted securities/stocks, listed securities (local equities), alternative investments, offshore unlisted securities, and investments in other collective investments.
Investments in commercial banks’ fixed deposits rose by the second fastest rate to reach an asset base of Sh210.4 billion in June from Sh146.2 billion in the prior quarter.
Only investments in cash/demand deposits and listed securities/local equities recorded a drop in the three months to June.
Collectively, the assets under management (AUM) of CISs rose by 20 percent in the period to hit Sh596.3 billion from Sh496.2 billion previously.
The growth in AUM was attributed to a lift from disclosures by newly registered funds, which commenced reporting in the quarter.
Growth was also linked to intensified marketing efforts by the fund managers.
