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Investment banks pivot to unit trusts in fees hunt
Investment banks are already licensed to engage in the business of a fund manager whose primary role is managing securities portfolios on behalf of investors.
Investment banks have transitioned into fund management, unveiling collective investment schemes/unit trust businesses and joining a ‘gold rush’ underpinned on strong interest in pooled investments among investing Kenyans.
The number of investment banks in the unit trust space has more than doubled over the last five years to 10 from four previously, as existing firms move to establish collective investment schemes (CISs).
As at March 2026, 10 of the 22 licensed investment banks were in the fund management space through unit trusts including Absa Securities Limited, Equity Investment Bank (EIB), Faida Investment Bank, Genghis Capital, KCB Investment Bank, and NCBA Investment Bank Limited.
Others are Stanbic Bank Kenya’s SBG Securities, Standard Investment Bank, Dry Associates Investment Bank and Gulfcap Investment Bank Limited.
This contrasts with just four investment banks in the scene five years ago in March 2021 --NCBA, Dry Associates, Genghis, and Equity.
The Capital Markets Authority (CMA) notes that existing investment banks have shown great interest in applying to start unit trusts whose assets under management (AUM) topped Sh851.7 billion in March 2026, jumping from Sh756.3 billion in December 2025.
“Both established and new players, alongside newly approved funds, are attracting significant interest as they expand their portfolios and respond to demand for innovative products,” the markets regulator said.
“This is evidenced by an increased number of applications for grant of fund manager license from new players and existing licensed investment banks, initially not in the fund management space, expressing interest and applying to establish CIS businesses.”
Investment banks are already licensed to engage in the business of a fund manager whose primary role is managing securities portfolios on behalf of investors.
Fund managers earn fees on asset management where the revenues are capped at two percent of AUM for traditional funds like money market funds (MMFs).
Special funds meanwhile levy charges of up to six percent of AUM per year as the schemes set costs beyond the average fund manager fee, including charges triggered by high performance and early investor exits, allowing them to draw higher revenues.
Unit trusts that include special funds have earned billions of shillings in fees from clients, making the business lucrative.
Standard Investment Bank (SIB) earned Sh1.4 billion in fees levied on its Mansa X Special Fund in 2024, thanks to growth in assets and re-investments by clients.
Fund managers are extracting higher revenues by growing their funds' AUMs and retaining clients by managing exits and encouraging reinvestments and top-ups.
At their current scale, unit trusts with Sh851.7 billion in assets can earn their fund managers a minimum of Sh17 billion, assuming only an overall charge of just two percent is applied across the board.
SIB, which started its Mansa X Special Fund in 2019, joined the CIS ecosystem as CMA included special funds as part of unit trusts in 2024.
Faida Investment Bank started its Oak Special Fund in the same year after also receiving regulatory nod.
Stanbic started the Stanbic Unit Trust Funds in September 2024 and attributed its foray into the asset management system to customers shifting part of their bank deposits to external players in fund management.
“Our clients are becoming much more sophisticated and asking for more investment options with higher yields. They are moving away from the traditional savings and fixed deposit accounts,” said Anjali Harkoo, the Head of Insurance and Asset Management at Stanbic Bank Kenya.
Other financial sector players are also making a foray into the fund management business by seeking licensing as an investment bank which allows a wide range of offerings including advisory, stock brokerage and securities dealing.
Stockbroker AIB-AYS Africa recently transitioned to become a fully-fledged investment bank as it sets its sight on wealth management. In December last year, the firm launched offshore funds including the Axiom Africa Equity Fund dominated in US dollars and Euros and offered investors exposure to top equities across the continent.
The firm further plans to launch global equity and fixed income funds and Shariah-compliant funds.
