T-bills vs. unit trusts in Kenya: an honest fee comparison for 2024

The 91-day Treasury bill rate averaged 15.97% per annum over the first half of 2024, according to Central Bank of Kenya auction data. That is a gross figure — and for a direct T-bill purchase made through a licensed stockbroker or a bank custody account, the net figure is close to gross because direct government paper carries minimal transaction costs (typically a one-time brokerage commission of 0.1–0.2% on nominal). Now compare that to the five largest money-market unit trusts operating in Kenya. Their advertised gross yields for the same period ranged from 14.1% to 16.8%. Attractive on the surface. But the Total Expense Ratios buried in their fund fact sheets ranged from 1.2% to 2.5% per annum. After fees, the best-performing unit trust in our sample returned 14.3% net — and the weakest returned 11.6% net. The direct T-bill, held to maturity, returned approximately 15.7% net of the brokerage commission. The gap matters more than it looks. On a KSh 500,000 investment held for twelve months, the difference between 15.7% net and 11.6% net is KSh 20,500 — roughly one month's take-home pay for a median formal-sector employee in Kenya.

None of this means unit trusts are bad products. They solve real problems: liquidity (you can redeem within 2–3 business days versus waiting for a T-bill maturity), fractional access (you can start with KSh 1,000 versus the KSh 50,000 minimum for direct auction participation), and the convenience of automated reinvestment. If you need those features, you're paying for them — and knowing the fee is the point. The honest framework is this: if your investment horizon is 91 days, your amount is above KSh 50,000, and you don't anticipate needing liquidity, the direct T-bill is almost certainly the higher net-return option in the current rate environment. If you're investing smaller amounts, want flexibility, or are building a regular savings habit that benefits from automation, a low-TER unit trust (aim for below 1.5%) is a reasonable trade-off. The numbers we've published here are drawn entirely from publicly available CBK data and fund fact sheets filed with the Capital Markets Authority. Check the sources, run your own figures, and don't take a fund manager's advertised yield at face value without reading the fee disclosure page of their fact sheet first.