Fixed Deposits, Fund Size and Performance of Unit Trust Funds in Kenya

Abstract

Aim: To determine the moderating effect of fund size on the relationship between investing in fixed deposits and performance of unit trust funds in Kenya. Study Design: Causal design. Place and Duration of Study: Census: Unit Trust Funds in Kenya for the period between January 2015 to December 2023. Methodology: Target population was 37 approved Unit Trust Funds in Kenya.  Census survey was adopted where all the 37 approved unit trust funds in Kenya were studied. The study used secondary data which was collected using a secondary data collection sheet. Data collected was analyzed using Stata version 18.0. Both descriptive and inferential statistics was used in data analysis. Descriptive statistics that were adopted in this study include; mean, standard deviation, minimum and maximum while the inferential statistic tools that were used include both Pearson correlation and panel data analysis. Results: Findings revealed that investing in fixed deposits had a significant positive effect on performance with (β=0.200, p < 0.05). Fund size had a significant moderating effect on the relationship between investment vehicles and performance of UTFs with (β= 0.345, p < 0.05). Conclusion: The study concluded that Unit trust funds that invest in fixed deposits have high chances of recording better asset returns. The study also concluded that fund size has a significant moderating effect on the relationship between investing in fixed deposits and performance of unit trust funds in Kenya. Unit trust funds with large fund size enjoy economies of scale, enjoy increased market power and chances of access to capital are high all which contributes to increase in asset returns. Fund managers of unit trust funds should increase the proportion on investment in fixed deposits as they improve investment returns.