Fund Size and Performance of Unit Trust Funds in Kenya

Abstract

When investors take part in any investment, the main objective is to increase their wealth. This is achieved when share prices increase. The performance of unit trusts in Kenya has however been poor compared to the counterparts in the rest of the world. The poor performance is a discouragement to individual and corporate investors in addition to affecting the realisation of financial stability according to the Kenya vision 2030. Empirical literature from developed and emerging markets posits that fund size explain the performance of unit trust funds. This study therefore investigated the effects of fund size on the performance of unit trust funds in Kenya. The study adopted an explanatory research design and positivism philosophy. The target population was 16 unit trust firms in Kenya as at the end of the year 2017. The study used a census approach. Secondary data was collected from the audited financial statement of respective unit trusts for the period 2005 to 2017 using a data collection schedule. The study established that fund size has significant positive effect on performance in all funds. The study concluded that increase in fund size increases performance. The study recommends that capital market authority should monitor performance of unit trusts constantly and in addition develop merger policies to encourage small unit trust to merge in order to take advantage of economies of scale.

The Moderating Role of Fund Size on the Relationship between Overconfidence and Portfolio Financial Performance of Mutual Funds in Kenya

“…Fund size is proposed as an explanation for the success of unit trust funds in empirical literature from established and emerging countries. Therefore, this study looked into how Kenyan unit trust fund performance is impacted by fund size (Nthimba et al, 2021)…”

The Moderating Role of Fund Size on the Relationship between Disposition effect and Portfolio Financial Performance of Mutual Funds in Kenya

“…The bad performance has an effect on the accomplishment of financial stability in line with Kenya Vision 2030 in addition to scaring away individual and corporate investment. In empirical literature from developed and developing nations, the idea of fund size is put out as an explanation for the success of unit trust funds (Nthimba et al, 2021).…”

Firm Financing on Financial Performance of Unit Trust Firms Listed in Nairobi Securities Exchange, Kenya

“…the fund managers invest the pooled funds in a portfolio of securities with the aim of generating returns in line with the specific objectives of the fund (Autoridad Nacional del Servicio Civil, 2021). Investors willing to invest usually lacks resource capacity to build a portfolio and also expertise, understanding and lack of time needed to manage their portfolio (Namu Nthimba et al, 2021a). Unit trust firms give potential investors opportunity to invest in a diversified securities without assuming the threat of managing the securities.…”

“…The performance of Unit trust in Kenya has been poor as compared to the counterparts in the rest of the world. The poor performance is a discouragement to investors both individuals and corporate besides affecting the realization of financial stability as per Kenyan Vision 2030 (Namu Nthimba et al, 2021b).The general performance of Unit trust has not been so much in upward trajectory due to various factors and some could be attributed to firm financing among others. Statistically Unit trust funds contributes approximately 0.80% to the country's GDP, (Capital Markets Authority report, 2020).…”

“…This reflect poor understanding of the markets by investors or the fund managers in general are doing well enough to woo investors. This kind of performance leads to poor investor confidence and depletion of investors wealth in the Unit trust fund (Namu Nthimba et al, 2021a).…”