A survey of the trading strategies employed by fund managers in Kenya
Abstract
The main objective of this study was to survey the trading strategies employed by the fund
managers in Kenya. The study's data set is comprised of a population of 15 fund managers
in Kenya registered by the Capital Markets Authority as at September 2005 and centred on
three main trading strategies namely: momentum strategy, contrarian strategy and the buyand-
hold strategy. It is an important study because this is a relatively new segment of the
financial services market in Kenya as the first fund managers were distinctly recognised in
2002.
The research design was by use of a questionnaire that had appropriate questions in the
language of fund managers. The methodology used to analyse the data, was by mean
(average) which established the descriptive statistics and intensity of use whilst correlation
co-efficient was able to clearly bring out the relationship between the information sources,
behavioural patterns and the trading strategies.
The research findings display that most fund managers rely on the strategies of buy-andhold,
momentum and contrarian trading, with the buy-and-hold highly recognised. The
strategies are typically applied mutually as shown by the intensity of use. Their source of
information is predominantly fundamentally oriented especially for the buy-and-hold
trader, and the momentum trader showing a strong inclination towards the technical
indicators and colleagues. The findings are consistent with the African market though a
little different from the developed market, which tend to spread the strategies.
The Kenyan market is still emerging hence the high percentage in the Buy-and-hold use.
Policy recommendations for the Government to avail online interactive news network also
the fund managers to interact with the developed markets to sharpen their skills in the fund
management industry.
Citation
A management resea.rch project submitted in partial Fulfilment of the requirements for the degree of master Of business administration, school of business, university of NairobiPublisher
Business Administration and planning