Investment Portfolio Diversification and Financial Performance of Retirement Benefits Schemes in Kenya

The general objective of the study was to investigate the effect of investment portfolio diversification on the financial performance of retirement benefits schemes in Kenya. The study further examined the moderating effect of foreign exchange rate on the relationship between the variables under inquiry. The study adopted the descriptive research design. The population of study comprised of 87 schemes. The sample size of the study was 72 units and it was determined using the she stratified random sampling technique. The study used both primary and secondary data. The statistical package for social sciences was used in data analysis. The hypothesis testing led to the rejection of H<sub>01 </sub>and H<sub>02, </sub>thus confirming that investment diversification in equities and investment diversification in bonds have a significant positive effect on the financial performance of the retirement benefits schemes in Kenya. The hypothesis testing for the moderated relationship model led to the rejection of H<sub>03, </sub>thus confirming that foreign exchange rate has a significant moderating effect on the relationship between investment portfolio diversification and the financial performance of the retirement benefits schemes in Kenya. The researcher therefore, recommends that the retirement benefits schemes should focus on diversifying their investments in equities and bonds because they both have a positive effect on the company’s financial performance. The researcher further recommends that the schemes should closely monitor the foreign exchange rate, because it has a significant moderating effect on the relationship between investment portfolio diversification and financial performance.