Equity Investments, Bond Investments and Financial Performance of Collective Investment Schemes in Kenya

Abstract

The collective investment schemes in Kenya have witnessed increased volatility in their earnings, resulting in irregular growth in the industry. This necessitates the need to understand the factors contributing to poor financial returns from collective investment schemes. Hence this study sought to investigate the effect of equity investments and bond investments on Kenyan CIS’s performance. The specific objectives were: To assess the effect of equity investments, bond investments on financial performance of collective investment schemes in Kenya. The study was anchored on: modern portfolio theory and the efficient market hypothesis. The positivism philosophy was applied, with the firms adopting an explanatory research design. The target population was 17 Collective Investment Schemes registered by the Capital Markets Authority and were operational in the period 2010 to 2018. Secondary data was sought from the Capital Markets Authority Annual reports and from the respective websites of the CIS’. Data was analyzed using descriptive statistics, correlational analysis and panel regression analysis. Hypotheses were tested at a significance level of 0.05. Findings indicate that equity investment, bond investments have an insignificant effect on CIS’ return on assets. Further, equity investments had a positive and significant effect on liquidity whereas bond investments had an insignificant effect on liquidity. The study recommends that CISs actively revise their equity investments and bond investments to stimulate financial returns.

Pension Assets Investments in the Nigerian Economy

“…This is equally supported by Shimave [6] that the investments made by pension schemes positively impact on the market liquidity and capitalization; and recommend that more e-channels should be adopted for wider collection and disbursement purposes. In Kenya, Muema et al, [10] employed the panel regression on 17 collective investment schemes from 2010 -2018; and found that only equity investment have significant impact on the returns of the investment schemes. They suggest that both equity and bond investments should be constantly revised to enable better financial returns.…”

“…Oladeinde [7] evaluated pension reforms in Nigeria's political economy and emphasized key institutional processes and the roles played by international policy advisors. Muema et al, [10] explored on equity and bond investments and its performance on Kenya's investment programs. Shimave [6] studied the effect of the administration of pension funds on stock market growth in Nigeria.…”