Kenya's CMA proposes risk ratings for unit trust funds

Kenya’s Capital Markets Authority (CMA) is considering a new regulatory framework to introduce independent risk ratings for unit trust funds and their managing companies. The proposal aims to increase transparency as the collective investment schemes market approaches the KSh1 trillion mark. As of June 30, 2026, the market held KSh948.7 billion across 320 funds, serving approximately 4.1 million investors.

The proposed system would feature two distinct ratings. A fund rating would evaluate portfolio-specific risks, including asset quality, default probability, liquidity, and currency exposure. A manager rating would assess the operating company’s governance, staff, systems, and track record. Special funds with complex or concentrated holdings would undergo additional scrutiny regarding cash flow and leverage.

CMA Chief Executive Wycliffe Shamiah noted that the regulator receives daily inquiries from investors regarding the safety of specific funds. While the Fund Managers Association has welcomed the initiative as a supplement to existing due diligence, the CMA has not yet released a formal draft rule or specific rating scale. The regulator is currently reviewing international models, such as those in Nigeria, the United States, and the European Union, to determine if the system should be mandatory or advisory.