Be Wary Investors: Foremost Factors in Asset Performance in East Africa: A Case of Collective Investment Schemes in Kenya

Abstract

Alternative investment schemes are one of financial intermediaries through which funds are pooled<br />together for the purpose of investment in various financial assets which are normally managed by<br />professional managers. One such avenue in Kenya is investing through a unit trust fund. It is therefore<br />important for an investor utilizing one of these managers to evaluate how well the fund has done relative<br />to other funds and that of the benchmark. However, these performances were affected by numerous<br />factors. It was on the above footing that the research is focused on evaluating the importance of key<br />factors that affect its performance. The research employed descriptive research design mainly cross<br />sectional and longitudinal research to achieve the objectives. The target population was all the eleven<br />unit trust funds in Kenya. The study used both primary and secondary data. As a source of primary data,<br />structured questionnaires and scheduled interview were used. The key factors were analyzed using factor<br />analysis and multiple regressions to establish the importance of these factors in determining funds’<br />performance. The finding was that the factors that affect performance of funds in Kenya were classified<br />into five categories namely foreign investment participation, online trading, experience, age and equity<br />risk. The main factors affecting equity funds performance were experience, age and online trading only<br />while none of these factors were significant in influencing the blended funds’ performance. The<br />prospective investors must therefore be mindful about these factors while weighing their investment<br />proposals.