The Impact on Financial Performance of Unit Trust Funds in Kenya by Investment Diversification

The main objective of investors was to increase their wealth when taking part in investment. This can be achieved when there is upsurge in share prices. Kenya unit trust funds have been performing poorly compared to the other parts in the rest of the world. The lowly performance is deterrence to persons and commercial investors. Experiential literature from developing and develop markets suggests that fund features elucidate the unit trust funds performance. In Kenya there is limited empirical literature elucidating the connection between investment diversification and financial performance of unit trust funds. This research thus was to examine the relationship between investment diversification and financial performance of unit trust funds in Kenya. The study was guided by the following objectives: define the influence of equity fund, define the influence of bond fund, define the influence of money market fund, define the influence of balanced fund and define the influence of special fund on financial performance of unit trust funds in Kenya. The study also pursued to institute the moderating effect of inflation on the relationship between independent variables and dependence variable. The behind theories of the study were modern portfolio theory, diversification strategy model, and pecking order theory, financial theory of finance and efficient market theory. Positivism philosophy and explanatory non-experimental research design was adopted in the study. The population will comprised of 36 unit trusts funds in Kenya as at the end of the year 2023. The study used a census approach. Secondary data was collected from the Audited reports from 2013 to 2023 using a data collection schedule. Descriptive analysis which was done include the mean and standard deviation. Inferential statistics which included panel regression was also performed. Diagnostic tests such as normality, heteroskedasticity, multicollinearity, stationarity and model specification was conducted. The study found out that financial performance is positively affected by investment diversification

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Publication Details

Journal
Asian Journal of Economics Business and Accounting
Published
2025-03-07
DOI
https://doi.org/10.9734/ajeba/2025/v25i31710
Primary Topic
Islamic Finance and Banking Studies
Type
article
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article

The Impact on Financial Performance of Unit Trust Funds in Kenya by Investment Diversification

Kennedy Omondi Okeyo
Asian Journal of Economics Business and Accounting
Islamic Finance and Banking Studies
article

The Impact on Financial Performance of Unit Trust Funds in Kenya by Investment Diversification

Kennedy Omondi Okeyo
article en

Abstract

The main objective of investors was to increase their wealth when taking part in investment. This can be achieved when there is upsurge in share prices. Kenya unit trust funds have been performing poorly compared to the other parts in the rest of the world. The lowly performance is deterrence to persons and commercial investors. Experiential literature from developing and develop markets suggests that fund features elucidate the unit trust funds performance. In Kenya there is limited empirical literature elucidating the connection between investment diversification and financial performance of unit trust funds. This research thus was to examine the relationship between investment diversification and financial performance of unit trust funds in Kenya. The study was guided by the following objectives: define the influence of equity fund, define the influence of bond fund, define the influence of money market fund, define the influence of balanced fund and define the influence of special fund on financial performance of unit trust funds in Kenya. The study also pursued to institute the moderating effect of inflation on the relationship between independent variables and dependence variable. The behind theories of the study were modern portfolio theory, diversification strategy model, and pecking order theory, financial theory of finance and efficient market theory. Positivism philosophy and explanatory non-experimental research design was adopted in the study. The population will comprised of 36 unit trusts funds in Kenya as at the end of the year 2023. The study used a census approach. Secondary data was collected from the Audited reports from 2013 to 2023 using a data collection schedule. Descriptive analysis which was done include the mean and standard deviation. Inferential statistics which included panel regression was also performed. Diagnostic tests such as normality, heteroskedasticity, multicollinearity, stationarity and model specification was conducted. The study found out that financial performance is positively affected by investment diversification

Asian Journal of Economics Business and AccountingVol. 25(3)
Jomo Kenyatta University of Agriculture and Technology (KE)
Openalex Percentile: Top 94%
Islamic Finance and Banking Studies
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