CMA Licenses Three New Fund Managers, Clamps Down on Influencer Marketing

The Capital Markets Authority (CMA) has approved three new fund managers, granting Kenyan savers alternative investment avenues to grow wealth beyond traditional bank accounts.

This regulatory expansion coincides with a significant enforcement push, as the authority actively intensifies its oversight of the rapidly expanding special funds sector.

The regulator has warned managers of special funds against promising unusually high returns without clearly disclosing the associated risks to prospective retail investors.

The newly licensed entities are ADAR Asset Management Limited, Entrust Advisory Limited, and Everstrong Asset Management Limited.

Everstrong Asset Management will focus on managing regional portfolios, targeting critical long-term asset classes including infrastructure, private equity, real estate, and energy projects across East Africa.

ADAR Asset Management plans to establish closed-end collective investment schemes, providing local investors access to alternative global markets through real estate-linked credit investments.

Entrust Advisory, which previously operated under an investment adviser licence, has been upgraded to a full fund manager to deliver technology-driven wealth management.

In addition to these fund managers, CMA has approved two new umbrella unit trust schemes that feature a combined total of 19 sub-funds.

The Cinemark Unit Trust Fund will launch seven sub-funds covering money market, fixed income, and multi-asset strategies in both Kenyan shillings and dollars.

Meanwhile, the Karsis Unit Trust Scheme will introduce 12 sub-funds spanning fixed income, private debt special funds, and multi-asset options across multiple currencies.

The regulator has also licensed four market intermediaries to deepen market depth and enhance product diversity for retail, institutional, and diaspora investors.

Among these is Istithmaar Lulu Maknoon Limited, approved as a Real Estate Investment Trust (REIT) manager to introduce innovative, Shariah-compliant property products.

Finaltus Limited received an Investment Adviser licence for cross-border corporate finance, while Saffron Coffee Marketers Limited secured a licence to operate as a coffee broker.

Frictionless Enterprises Limited, trading as Power, secured an Intermediary Service Platform Provider licence to facilitate seamless payroll-integrated investments into money market funds.

This widespread expansion comes as assets held within special funds surged to Sh203.5 billion, capturing nearly 24 percent of the collective investment market.

However, the rapid influx of retail capital has prompted CMA to tighten the official code of conduct governing special funds.

The authority has raised concerns over unethical marketing, poor risk disclosures, and the controversial use of social media influencers to promote complex funds.

Many promotional campaigns focus entirely on attractive headline returns, but they fail to adequately explain underlying investment strategies, liquidity risks, or potential losses.

There are additional concerns regarding high annual management fees, which can reach up to six percent, alongside performance fees when returns beat benchmarks.

The regulator is also investigating how short-term returns are annualised, which can make historical performance look far more attractive than it actually is.

CMA reiterated that all fresh approvals remain strictly conditional on continued compliance with the Capital Markets Act and existing collective investment regulations.

Unlicensed operators face regulatory enforcement action, as the authority seeks to protect the wider public from digital investment fraud and unauthorized financial schemes.

Investors are strongly advised to deal only with licensed market intermediaries and thoroughly evaluate trust deeds before committing their hrd-earned capital to any alternative scheme.