Cytonn Money Market Fund: Your Guide To Investing

Money Market Funds (MMFs) are a popular investment vehicle in Kenya, and the Cytonn Money Market Fund is a great option for those looking to invest. MMFs invest in highly liquid securities, such as cash equivalents and government securities, offering a high degree of safety and relatively high returns compared to traditional savings accounts. The Cytonn Money Market Fund specifically offers a range of benefits, including capital preservation, ease of transaction, daily calculated interest, and high-interest returns on low-risk investments. With no entry or exit fees, competitive rates, and the option to invest in USD, it's a great starting point for first-time investors.

How to open a Cytonn Money Market Fund account

Step 1: Download the Cytonn App

You can download the Cytonn App from the Play Store or App Store on your mobile device.

Step 2: Open the App and Sign Up

Once you have downloaded the Cytonn App, open it and sign up by creating an account. You will need to provide some basic information, such as your full name, email address, and ID or passport number.

Step 3: Visit the Cytonn Website

Go to the Cytonn website, clients.cytonn.com, for more information about the CMMF and to access your account online.

Step 4: Dial *809#

You can also access your CMMF account by dialling *809# on your mobile phone. This will allow you to create an account and check your balance.

Step 5: Make Your First Investment

The minimum investment amount for the CMMF is Ksh 100. You can invest using the Cytonn App, the USSD code (*809#), or the web platform. When investing through the web platform, visit https://clients.cytonn.com/apply/investment, fill in the online application form, enter the token sent to your phone number, and make your investment using your bank account or M-PESA.

By following these steps, you can open a CMMF account and start investing with Cytonn. Remember to review the terms and conditions carefully before investing and seek financial advice if needed.

The benefits of a Money Market Fund

Money Market Funds (MMFs) are currently one of the most popular investment vehicles in Kenya. Here are some of the benefits of investing in a Money Market Fund:

• Low Risk: MMFs invest in highly liquid securities like cash equivalents, government securities, and highly-rated debt-based securities, therefore offering a high degree of safety. They are also regulated by the CMA, which further ensures the security of your investments.
• High Returns: MMFs offer relatively high returns compared to traditional savings accounts and bank deposits. For example, the Cytonn Money Market Fund offers an average annual interest of 11%.
• Liquidity: MMFs provide investors with liquidity as they invest in short-term securities that can be easily liquidated for cash. This allows investors to withdraw their funds at will.
• Low Minimum Investment: Most MMFs have low minimum investment amounts, making them accessible to a wide range of investors. For instance, the minimum investment for the Cytonn Money Market Fund is Ksh 100.
• Professional Fund Management: MMFs are managed by investment experts, who conduct extensive research and continuously monitor the market to make informed investment decisions.
• Diversification: MMFs provide investors with access to a diverse range of securities, minimizing financial risk.
• Flexibility: MMFs offer flexibility in terms of fund management. Investors can easily move funds between various collective investment schemes, such as the Balanced and Equity Funds.
• Accessibility: MMFs are liquid and easily accessible, allowing investors to withdraw funds at short notice.
• No Entry or Exit Fees: There are no entry or exit fees charged for investing in the Cytonn Money Market Fund.

The risks of a Money Market Fund

Money market funds are a type of mutual fund that invests in highly liquid, short-term debt securities with high credit quality. While they are considered a low-risk investment option, there are still some risks associated with investing in money market funds. Here are some of the potential risks to consider:

Credit Risk

Money market funds are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. While these funds invest in high-quality securities and aim to preserve the value of your investment, there is a possibility of losing money. There is no guarantee that you will receive the initial amount invested or a $1 per share when redeeming your shares.

Inflation Risk

Due to the short-term and low-risk nature of the underlying investments, money market fund returns may be lower than those of more volatile investments, such as stocks or typical bond mutual funds. This creates the risk that the rate of return may not keep up with inflation, resulting in a loss of purchasing power.

Liquidity Risk

Money market funds may impose a liquidity fee upon the sale of your shares if the fund's board determines it is in the fund's best interests. This fee is typically limited to 2% of the value of the shares redeemed. Additionally, institutional prime and institutional municipal/tax-exempt money market funds will mandate a liquidity fee if the fund experiences net redemptions exceeding 5% of net assets in a single day.

Price Risk

The share price of institutional prime and institutional municipal money market funds can fluctuate, which means that when you sell your shares, they may be worth more or less than what you originally paid.

Expenses Impacting Returns

The fees associated with money market funds can significantly impact the overall returns. Even small annual fees can eat up a substantial portion of the profits, making it challenging for investors to keep up with inflation.

Risk of Higher Yields

Fund managers may take on additional risks to pursue higher yields. For example, they may invest in bonds or commercial paper with higher risks to capture a slightly higher return. Investors should carefully consider their investment objectives and time horizon before choosing a money market fund based solely on the potential yield.

It is important for investors to carefully consider these risks and conduct thorough research before investing in money market funds. While these funds offer stability and security, there are still potential drawbacks that should be weighed against the potential benefits.

How to withdraw from a Cytonn Money Market Fund account

To withdraw from your Cytonn Money Market Fund (CMMF) account, you can use any of the following methods:

Method 1 – Using the web platform

• Visit https://clients.cytonn.com/
• Once logged in, click on "view fund" (CMMF).
• Select the product you want to withdraw from.
• Select the account you want to send the funds to (details on record will be displayed).
• Enter the number of units you would like to withdraw.
• Confirm the sell unit details.
• Enter the token sent via SMS/Email/Authy.

Method 2 – Using USSD

• Select Option 1: Transact.
• Then Option 2: Withdraw.
• Choose the product to withdraw from (CMMF).
• Choose where you would like to send the money:

• Option 1. M-PESA
• Select the account to send the funds to (details on record will be displayed).
• Input the amount you would like to withdraw.

Method 3 – Using the Cytonn App

• Once logged in, click on your CMMF investment.
• Enter the number of units to withdraw.
• Select Bank account/M-PESA number to send funds to.
• Enter the token sent via SMS/Email/Authy.

Important Notes:

• For withdrawals below 300k KES, this will be done automatically to M-PESA or bank and received within 3 minutes.
• Withdrawals above 300k KES can only be done to the bank and will take 2-4 working days.
• All withdrawal instructions have to be done through any of the online platforms or USSD. Any manual instructions will attract an additional charge of 200 KES.
• M-Pesa deposits made on working days reflect after 24 hours. Local deposits made on working days take 12-48 hours to reflect, while diaspora deposits take 2-4 working days.

How to top up a Cytonn Money Market Fund account

To top up your Cytonn Money Market Fund (CMMF) account, you can use either the Cytonn App, the Cytonn Client portal, or SBM Bank Online Transfer.

Using the Cytonn App:

• Log in to the Cytonn App.
• For bank transfers, attach an image of the deposit slip/payment screenshot.
• Confirm the transaction.
• Enter your M-Pesa PIN if you are using the M-Pesa option.

Using the Cytonn Client Portal:

• Log in to the Cytonn Client portal.
• For bank transfers, attach an image of the deposit slip/payment screenshot.
• Confirm the transaction.
• Enter your M-Pesa PIN if you are using the M-Pesa option.
• Select Option 1 to top up.
• Select the account you want to transact from.
• Input the amount you want to top up.
• Choose your preferred method of payment: Bank/M-Pesa.

Using SBM Bank Online Transfer:

Account Name: Cytonn Money Market Fund Collection Account

Account Number: 0012400721001

Bank Name: SBM Bank (Kenya) Limited

Branch: City Centre Branch

Swift Code: SBMKENYA

The minimum investment amount is Ksh 100.

Please note that the time taken for the funds to reflect in your CMMF account depends on the type of deposit. M-Pesa deposits made on working days reflect after 24 hours, while local deposits can take up to 48 hours. Diaspora deposits may take longer, up to 2-4 working days.

Frequently asked questions