What Are Special Funds?

Kenya’s capital markets space has seen a shift in investments with Capital Markets Authority Quarterly reports on Collective Investment Schemes showing that Money Market Funds, which accounted for more than 90% of Kenya’s Collective Investment Scheme assets in 2021, represented just 51.9% of the industry’s KES. 851.7 billion in assets by March 2026.

The report shows that in March 2018, the Assets Under Management by Collective Investment Schemes were at KES. 56.6 Billion. Eight years later, the AUM has grown to KES. 851.7 Billion with special funds accounting for KES. 203.6 Billion of this. The Special funds representation has grown to 23.9% in Q1 2026 up from a paltry 6% in Q1 2021.

Special Funds have become the fastest-growing segment, with Mansa-X Special Fund managing more than USD 1.43 billion across its conventional and Shariah-compliant strategies, representing 73.5% of market share in the Special CIS category. Mansa-X has delivered an average annual return of 18.37% since its inception in 2018.

But what are Special CIS Funds and how do they achieve the above-average returns they deliver?

Special Funds are a category of Collective Investment Schemes (CIS) regulated by the Capital Markets Authority. Unlike traditional Money Market, Equity, or Balanced Funds, they have much broader investment mandates.

They may invest in government securities, corporate bonds, listed and unlisted equities, foreign securities, private debt, infrastructure bonds, commodities, precious metals, structured products and other alternative investments permitted by the fund’s deed and CMA regulations.

Because Special Funds can invest in a wider range of assets, they may have the potential to generate returns that differ from traditional funds such as Money Market Funds. The investment strategy depends on each fund’s offering documents and CMA approval.

The word ‘special’ refers to the greater flexibility in terms of where these funds can invest. This flexibility allows fund managers to look beyond traditional markets when seeking investment opportunities.

Special Funds are regulated by the Capital Markets Authority, just like other Collective Investment Schemes.

The CMA’s role includes, licensing fund managers, approving new funds and their investment mandates, monitoring compliance with regulations and promoting investor protection.  Each Special Fund must also operate according to its approved trust deed or offering documents, which clearly define what it can and cannot invest in.

While CMA regulates Kenya’s capital markets and licenses Special Funds, investor protection does not rely on the regulator alone. Every Special Fund operates within a governance framework that includes several independent parties, each with a distinct role in safeguarding investors’ interests and ensuring regulatory compliance.

The Fund Manager makes investment decisions in line with the fund’s mandate, the Trustee oversees the manager on behalf of investors, the Custodian independently holds the fund’s assets, and the Auditor reviews the fund’s financial statements to ensure accuracy and transparency. Together, these independent parties create a system of checks and balances that promotes accountability, regulatory compliance, and investor confidence.

Alternative investments may take longer to mature, may be less liquid than listed securities, and can experience different market risks. For that reason, Special Funds are generally suited to investors who understand that returns are not guaranteed and who are investing with medium- to long-term objectives.

Kenya’s largest Special CIS Fund Mansa-X Special Fund KES  powered by Standard Investment Bank delivered 10.97% in net returns for the first half of 2026. This translates to an annualized net return of 23.15%. The Mansa-X Special Fund USD option delivered 3.56% net return in Q2 2026 bringing H1 2026 performance to 6.54% translating to an annualized return of 13.51%.

On the Shariah-compliant front, Mansa-X Shariah Special Fund KES delivered a net return of 3.78% in Q2 2026, bringing the H1 2026 performance to 6.73% Net, translating to an Annualized Net Return of 13.91%. The Mansa-X Shariah Special Fund USD, on the other hand, delivered a net return of 3.30% in Q2 2026 to bring the H1 2026 performance to 5.05% Net. This translates to an Annualized Net Return of 10.35%.

Shariah-compliant special funds such as Mansa-X Shariah Special Fund follow the principles of Islamic Finance that promote fairness, transparency and responsible enterprise. It prohibits interest (riba), excessive uncertainty (gharar) and investment in activities that are inconsistent with Islamic values, including alcohol and gambling. Instead, it encourages investment in real economic activity, responsible trade and the sharing of risk and reward.

These principles extend beyond commercial activity to social welfare through Zakah, voluntary charity (Sadaqah) and endowments (Waqf), reinforcing the role of finance as an instrument for social and economic inclusion. At SIB, Shariah Compliance of the Mansa-X Shariah Special Fund is overseen by an Independent Shariah Advisory Board.

Read Also: What You Need To Know About Special Funds In Kenya

This piece is courtesy of Standard Investment Bank (SIB) and can be accessed HERE.