Faulu Microfinance Bank has launched a money market fund (MMF), targeting to widen the investment options for its customers.
An MMF is a type of mutual fund that invests in high-quality, short-term debt instruments, cash and cash equivalents.
Though not exactly as safe as cash, MMFs are considered exceptionally low risk on the investment spectrum and thus carry close to the risk-free rate of return.
MMFs are mainly invested in government and corporate debt securities that tend to outpace inflation, offering investors a better chance to preserve the real value of investments compared to conventional savings options.
Faulu Bank said the MMF is part of its strategic plan to advance its wealth management portfolio, leveraging the extensive expertise and resources of the Old Mutual Investment Group (OMIG), the investment arm of its parent company, Old Mutual Group.
“We are pleased to introduce our MMF, which is part of the innovative financial solutions we are creating for our customers. This launch broadens the access of our clients to high-quality investment opportunities,” the bank’s Chief Executive Officer, Julius Ouma said in a statement Tuesday.
“We are working with a team of very experienced investment managers, who will ensure that our customers get the best returns on their investments,” he added.
The Faulu MMF had an annual yield of 16.32 percent as of July 18, 2024, with investors allowed to set up portfolios with a minimum of Sh1,000.
The Faulu MMF was launched a month after the bank received a significant capital injection of Sh900 million from the Old Mutual Group.
Faulu said the capital injection strengthened its financial position, enabling it to increase its lending capacity and broaden its range of products and services.
“The Old Mutual Group has extensive experience in MMF management stretching over decades and we bring this expertise to ensure that Faulu customers get competitive returns on their investments,” said Old Mutual Investment Group Managing Director, Anthony Mwithiga.
He added: “Our teams of fund managers will be fully available to give guidance across a diversified portfolio of money market instruments.”
