Special Funds: What They Are (And What They Are Not)

Correcting the most dangerous misconception in Kenyan retail investing

Across Kenya, more retail investors are being drawn into “special funds” with the promise of double-digit returns, often framed as the natural upgrade from a money-market fund. Yet most of these conversations never pause to explain what a special fund actually is and what it isn’t.

In simple terms, a special fund is a Special Collective Investment Scheme licensed by the Capital Markets Authority to invest in a broader, riskier range of assets than ordinary money-market or bond funds.

These can include real estate projects, infrastructure, listed and unlisted equities, private placements, and foreign-market exposures. The word “special” does not mean safer or guaranteed; it means different rules, higher risk, and a different investor profile.

“Higher allowed risk means larger draw downs, longer recovery periods, and the real possibility of losing money, sometimes for years.”

Retail investors often assume that higher allowed risk automatically translates into higher winning percentages. It does not. Special funds are not upgrade versions of your money-market fund; they are separate vehicles aimed at investors who understand asset classes such as equities, real estate, or foreign markets and who can afford to leave their money locked in for several years.Before you move a single shilling from a stable, liquid fund into a special one, treat the step as an upgrade in understanding, not just in yield. If the manager or investment advisor cannot explain the fund’s strategy in plain language, that is your first red flag.

Action Step:

Ask three questions before investing:

1. What are the main assets?
2. What is the typical holding period?
3. Has this team delivered in this specific asset class over a full market cycle?