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