| dc.description.abstract | The importance Collective Investment Schemes as an investment vehicle today lies in the
fact it’s the most effective ways of mobilizing savings and investments across the
socioeconomic divide especially from small investors who are locked out from other
importance investment opportunity. This paper evaluates the effect of interest rate and
inflation on growth of collective investment schemes in Kenya for the period 2004 to
2013. The study adopted descriptive research design. The study targeted collective
investment schemes registered under asset managers licensed by Capital Market
Authority. The data was on total asset growth of the asset managers, interest rate,
inflation, GDP growth rate, total funds returns got from CMA and Kenya National
Bureau of Statistics. The effect of the independent variables on collective investment
schemes’ growth was analyzed using multiple linear regression models and Pearson
correlation analysis. The study’s findings show that positive and significant correlation
between total asset growth, and interest rates and inflation rate. Negative and significant
correlation between total asset growth and total funds returns. Moderate linear
relationship (39.7%) existed between interest rate, inflation rate and total asset growth of
the collective investment schemes. It is concluded that interest rates and bonds positively
affect collective investment schemes growth since as investors constantly compare the
scheme’s returns on their current investments to what they could get elsewhere in the
market. As market interest and inflation rates change, the schemes’ returns becomes more
or less attractive to investors, who are therefore willing to pay more or less for them. The
study recommended that investors need to invest in diversified funds to ensure high
return as different types of funds performed differently, take great care that the profile of
the CIS meets their needs and risk profile. | en_US |
