The framework for index funds in Kenya
Abstract
The study set out to assess the institutional and regulatory framework for index
funds in Kenya. The study set to find out whether there are factors in place that
may be able to support the introduction of index funds. The need for the study
emanated from the apparent inability of fund managers to outperform the
market as represented by an unmanaged index. This study builds on the passive
versus active management strategies in the Kenya capital market.
The study looked at the importance of index funds to the financial system and
how the index funds would benefit the investing public. It also examines the
Kenyan investor profile to see whether it matches the investor characteristics
associated with Index funds. The structure of the capital market and the
characteristics of fund managers were explored to find out whether they support
passive or active investment strategies. Focus was also placed on the current
state of the legal and requlatorv frarnework and how well investors are protected
in the Kenyan market. Finally, the capital market was examined to determine the
existence of Index funds' critical success factors.
There was sufficient evidence of the existence of factors that form the
framework for index funds. However, a number of issues such as inefficiency of
the capital markets, lack of adequate regulation and investor protection need to
be addressed for the successful introduction of Index funds into the Kenyan
Capital market.
Citation
Masters Of Business Administration (MBA) Degree, University of NairobiPublisher
University of Nairobi School of Business
Description
A management research project submitted in
fulfillment of the requirements of the Degree of
Master of Business Administration, (MBA), School Of
Business, University Of Nairobi