CMA Must Not Fear High Returns; It Must Build A Market Where Kenyan Investors Can Win

The Capital Markets Authority is right to worry when investment products are marketed to ordinary Kenyans with loud promises of high returns but without equally loud warnings about risk. No responsible market can allow fund managers, influencers, agents or sales teams to shout returns and whisper losses. If a product carries liquidity risk, valuation risk, concentration risk, leverage risk, currency risk, private-market risk or drawdown risk, the investor must know before committing a single shilling. But the harder question is this: why does the regulatory conversation in Kenya often sound like a warning against ambition itself? Why does the language around special funds so easily become a suspicion of better returns, instead of a serious national conversation about how to build a capital market that actually rewards intelligent investing?

CMA has reportedly cautioned special fund managers against unethical marketing, poor material disclosures, unqualified sales representatives and the promotion of high returns without adequate information to clients. That concern is legitimate. The special funds segment has grown too large to be treated casually. According to reporting on the regulator’s latest engagement with the sector, special funds had reached KSh203.5 billion by the end of March 2026, accounting for 23.9 percent of collective investment schemes. CMA’s own Q1 2026 Collective Investment Schemes report also shows the broader CIS market at KSh851.7 billion, up 13 percent from KSh756.3 billion in December 2025, with 62 approved schemes, 285 funds and 43 active schemes. This is not a side market anymore. It is becoming a serious savings and wealth-building channel for households, professionals, entrepreneurs and institutions.

That is exactly why the debate must be framed properly. The problem is not that some fund managers are delivering stronger returns than traditional products. Kenya should not criminalise performance. A market where every product is forced to behave like a low-yield deposit account is not a capital market; it is a comfort blanket for mediocrity. The problem is when performance is advertised as certainty, when volatility is hidden, when fees are buried in fine print, when net returns are confused with gross returns, when past performance is sold as a promise of future income, and when retail investors are treated as deposits to be harvested rather than capital partners to be respected.

A serious regulator must be anti-fraud, anti-misrepresentation and anti-opacity. It must never be anti-return. There is a world of difference between an abnormal return and an intelligently earned return. An abnormal return with no explanation, no strategy, no audited valuation, no benchmark, no drawdown history, no independent custodian visibility and no liquidity discipline should invite scrutiny. But a better return produced by research, active allocation, disciplined risk management, access to multiple asset classes, global diversification and serious fund governance should be celebrated. Investors do not need a regulator that fears excellence. They need one that separates excellence from deception.

This is where CMA must move beyond warnings and build the right environment. Warnings may protect investors for a day, but architecture protects them for a generation. If Kenya wants retail investors to trust special funds, alternative funds, multi-asset strategies and other innovative products, the answer is not to scare the market back into the old corner. The answer is to create a disclosure regime that is simple enough for retail investors to understand and rigorous enough for sophisticated managers to respect. Every special fund marketed to the public should publish a standard investor factsheet showing the investment objective, strategy, asset allocation bands, benchmark, gross return, net return, all fees, performance fees, liquidity terms, redemption gates, valuation method, largest exposures, risk level, maximum historical drawdown and the identity of the fund manager, trustee and custodian.

That is not overregulation. That is market infrastructure. It is the financial equivalent of road signs, traffic lights and speed limits. The point is not to ban driving fast; it is to make sure the road is safe, the driver is qualified, the vehicle is roadworthy and passengers know the journey they are taking. In the same way, a market that wants innovation must standardise disclosure, enforce honest marketing and punish deception quickly. It must license the right people, not merely register paperwork. It must make trustees and custodians active guardians of investor money, not ceremonial names printed in documents that nobody reads.

Kenya’s current investment market has a deeper trust problem. Too many investors have watched products carry the comfort of regulation while still leaving them exposed to opaque fees, weak communication, delayed redemptions, unexplained losses, conflicts of interest and confusing documents. That is why the public anger is understandable. When investors say many regulated products look questionable, they are not always speaking as technicians; they are speaking from experience, suspicion and fatigue. They are asking a valid question: what is the value of regulation if the investor only discovers the real risk after the money is already trapped, impaired or gone?

The answer cannot