If you’re trying to invest in Kenya today, the hardest part is often not finding options — it’s choosing between them.

Money market funds promise stability, bonds sound predictable, equities offer growth, and REITs sit somewhere in between. The problem is that most explanations compare them in theory, not in the way Kenyan investors actually experience them.

This guide breaks down REITs, MMFs, bonds, and equities in plain language, focusing on how they behave in real portfolios, not just how they’re described in textbooks.

If you’re new to REITs specifically, it helps to start with the full background here:
Kenya REITs investment guide

How money market funds really function in Kenya

Money market funds are often the first investment Kenyan savers encounter. They invest mainly in short-term debt instruments such as Treasury bills, bank deposits, and commercial paper.

In practice, MMFs behave more like enhanced savings accounts than investments. Their biggest strength is stability. Day-to-day fluctuations are minimal, liquidity is high, and access to funds is usually quick.

The trade-off is that MMFs are not designed for long-term wealth creation. Returns tend to track interest rate cycles, meaning yields fall when rates decline. Over long periods, MMFs generally protect capital rather than grow it significantly.

For many investors, MMFs work best as a parking place for cash, an emergency fund, or a low-risk buffer inside a broader portfolio.

Where bonds fit — and where they surprise people

Bonds are often described as safe and predictable, but the reality is more nuanced.

In Kenya, bonds usually come in the form of government securities or corporate debt. They provide scheduled interest payments and return principal at maturity, which creates a sense of certainty.

However, bond prices can fluctuate before maturity, especially when interest rates change. Longer-term bonds are particularly sensitive to rate movements, which can surprise investors who assumed bonds never lose value.

Bonds tend to suit investors who want structured income over a defined period, are comfortable locking up funds, and understand that liquidity can vary depending on the bond and market conditions.

How equities behave — not how they’re advertised

Equities represent ownership in businesses. Over the long term, they have historically delivered the strongest growth, but they also demand emotional discipline.

In the Kenyan market, equities can be volatile and sentiment-driven. Prices respond quickly to earnings, policy changes, global trends, and sometimes speculation. Dividends exist, but they are secondary to price movement for most stocks.

Equities reward patience and tolerance for fluctuations. They work best for investors who can stay invested through market cycles and avoid reacting to short-term noise.

Where REITs sit between income and growth

REITs combine elements of all three asset classes.

Like MMFs and bonds, REITs are often purchased for income, with distributions coming from rental cash flows. Like equities, REIT units can trade on the market and fluctuate in price. And like physical property, REITs are exposed to occupancy levels, location quality, and real estate cycles.

In Kenya, REITs are still developing as a market. Liquidity can be limited, and price discovery may be uneven. However, REITs offer something unique: access to income-generating property without owning buildings directly.

REITs tend to suit investors who want income with some growth potential and are comfortable holding assets over the medium to long term.

Choosing based on purpose, not labels

The biggest mistake investors make is asking which investment is “best” in isolation. A better question is what role the investment plays.

If the goal is capital preservation and easy access, MMFs make sense. If the goal is structured income over time, bonds may fit. If the goal is long-term growth, equities are hard to ignore. If the goal is income linked to real assets with some upside, REITs become relevant.

Most well-balanced portfolios use a combination, not a single asset class.

A realistic way to think about allocation

Rather than chasing the highest yield or headline returns, it helps to think in layers.

Cash and MMFs provide stability and flexibility. Bonds add income predictability. REITs introduce real-asset exposure and income potential. Equities drive long-term growth.

Your mix will depend on time horizon, risk tolerance, and how actively you want to manage investments. There is no universal allocation that works for everyone.

Why REITs are often misunderstood

Many investors expect REITs to behave like guaranteed-income products. In reality, REIT performance depends on tenant quality, costs, interest rates, and management decisions.

Others expect REITs to mirror property price growth, forgetting that listed REITs also reflect market sentiment and liquidity.

Understanding these dynamics helps set realistic expectations and prevents disappointment.

Putting it all together

Each investment type has a role. Problems arise when expectations don’t match reality.

MMFs are not growth engines. Bonds are not risk-free. Equities are not quick wins. REITs are not guaranteed rent cheques.

The most successful investors tend to use these tools together, adjusting emphasis as life circumstances and market conditions change.

Where to go next

If you want a practical guide to actually buying a REIT, read:
How to invest in a Kenyan REIT step by step

If you want to dig deeper into analysis, the next guide will explain how to evaluate a REIT before investing.

For the full REIT overview, return to:
Kenya REITs investment guide