Building wealth in Kenya doesn’t have to be complicated or reserved for the elite. The Old Mutual bond fund provides everyday Kenyans with a pathway to grow their money through professionally managed investments in treasury bills, corporate bonds, and fixed deposits.
If you’ve been searching for an investment that delivers better returns than savings accounts without the wild swings of the stock market, you’re in the right place. This guide walks you through everything you need to know about the Old Mutual bond fund—from how it works to whether it aligns with your financial goals as we head into 2026.
What is the Old Mutual Bond Fund?
The Old Mutual bond fund is a fixed-income unit trust that pools money from multiple investors to create a diversified portfolio of debt securities. Essentially, you’re joining forces with other investors to access bond investments that would be difficult or expensive to buy individually.
The fund’s primary objective? To deliver long-term capital growth and periodic income returns from a well-diversified portfolio. This includes treasury bonds (government securities), corporate notes (company debt), fixed deposits, and call deposits.
Think of it as a middle ground between conservative money market funds and aggressive equity investments. You get better returns than traditional savings accounts while maintaining a relatively stable investment compared to stocks.
How the Old Mutual Bond Fund Works
Understanding the mechanics helps you appreciate what you’re investing in. The Old Mutual bond fund operates under a structured framework designed to protect your interests.
Key Players in the Fund Structure:
- Fund Manager: Old Mutual Investment Group (makes all investment decisions)
- Trustee: Oversees fund operations and ensures compliance
- Custodian: KCB Bank (holds fund assets securely)
- Regulator: Capital Markets Authority (supervises the entire operation)
This separation of duties creates multiple layers of accountability. No single entity controls everything, which protects your investment from mismanagement.
Here’s how your money flows: When you invest, your funds join a pool managed by Old Mutual’s professional investment team. These experts analyze market conditions, assess bond quality, and strategically allocate resources across different fixed-income instruments.
The fund primarily invests in:
- Treasury bonds: Government-backed securities with lower default risk
- Corporate notes: Debt from creditworthy companies offering higher yields
- Fixed deposits: Bank deposits with guaranteed returns
- Call deposits: Short-term deposits offering liquidity
Moreover, the fund maintains diversification across different maturities and issuers. This approach helps balance risk and return while providing steady income generation.
Current Performance and Accessibility
Let’s talk numbers—the most important part for any investor. As of recent data, the Old Mutual bond fund has maintained a unit price of KES 102.94, reflecting stable growth since its inception.
However, here’s something crucial to understand: unlike money market funds that advertise eye-catching percentage yields, bond funds typically show their performance through unit price appreciation and income distribution. This makes them more stable but less flashy in marketing materials.
Investment Requirements and Accessibility
One of the most attractive features of the Old Mutual bond fund is its accessibility. Here’s what you need to know:
Minimum Investment Requirements:
| Investment Type | Amount |
| Initial Investment (Equity Fund) | KES 50,000 |
| Initial Investment (Other Funds) | KES 1,000 (via *480#) |
| Subsequent Top-ups | KES 1,000 |
| Maximum Investment | No limit |
Special Note: While the equity fund requires KES 50,000 minimum, the bond fund falls under the general category accessible through the *480# platform for investments under KES 150,000. For larger initial investments, you’ll need to visit an Old Mutual branch or use their online i-INVEST platform.
This flexibility makes the fund accessible to a wide range of investors—from recent graduates starting their investment journey to experienced investors seeking portfolio diversification.
Key Benefits of the Old Mutual Bond Fund
So why should you consider this particular fund? Let’s explore the compelling advantages.
Established Track Record and Trust
Old Mutual isn’t a new player in Kenya’s financial market. The company brings over 175 years of investing experience across Africa. The Old Mutual Money Market Fund alone has been operating since March 24, 2003, demonstrating longevity and stability.
Additionally, Old Mutual has been recognized as one of Africa’s pre-eminent financial services providers, managing substantial assets across 12 countries. This institutional strength provides confidence that your investment is in capable hands.
Professional Management You Can Trust
You’re not navigating bond markets alone. Old Mutual Investment Group employs seasoned investment professionals who constantly monitor market conditions, assess credit risks, and adjust the portfolio to optimize returns.
Consequently, you benefit from expertise that individual investors can’t easily replicate. They handle the complex research, credit analysis, and strategic decision-making while you focus on your career and other priorities.
Higher Returns Than Savings Accounts
Traditional savings accounts in Kenya offer returns of around 6-8% per annum. The Old Mutual bond fund, investing in longer-term fixed-income securities, typically delivers superior returns. While exact figures fluctuate with market conditions, bond funds historically outperform standard savings accounts by 3-5 percentage points.
This difference compounds significantly over time. On a KES 100,000 investment, an additional 4% annually translates to KES 4,000 more per year—money that continues to grow through compounding.
Liquidity When You Need It
Unlike direct bond investments that lock your money until maturity, the Old Mutual bond fund offers reasonable liquidity. The Capital Markets Act requires unit trust managers to buy back units whenever unitholders wish to sell.
Furthermore, withdrawals are processed within 2-5 business days, providing you with access to your funds relatively quickly. Your first withdrawal each month is free, though subsequent withdrawals may incur fees.
No Fixed Investment Period
You’re not locked into a specific time frame. You can invest for as long as you like, whether that’s 2 years, 5 years, or longer. This flexibility allows you to align your investment horizon with your personal financial goals.
Easy Fund Switching
Market conditions change, and so do your financial needs. Old Mutual allows you to switch between different unit trust funds without penalties. If you later decide the equity fund or money market fund better suits your needs, you can transfer your investment seamlessly.
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Understanding the Risks
Let’s keep things real. No investment is completely risk-free, and the Old Mutual bond fund has its considerations.
Interest Rate Risk
When interest rates rise in the broader economy, the prices of existing bonds typically fall. This happens because new bonds get issued at higher rates, making older bonds less attractive. During periods of rising interest rates, the unit price of your fund may temporarily decline.
However, remember that this is primarily a paper loss unless you sell during the dip. The fund manager actively manages this risk by maintaining bonds with varying maturities.
Credit Risk
While treasury bonds carry minimal default risk (backed by the government), corporate notes depend on company performance. If a corporate issuer struggles financially, it might default on interest payments or principal repayment.
That said, Old Mutual invests only in high-quality corporate debt from creditworthy issuers. They conduct thorough due diligence before adding any corporate bond to the portfolio.
Medium Risk Classification
The Old Mutual bond fund is classified as a medium-risk investment. It’s riskier than money market funds but safer than equity funds. This positioning makes it suitable for moderately conservative investors seeking better returns without extreme volatility.
Market Conditions Impact
Economic conditions, inflation expectations, and political events all influence bond prices. During turbulent times, you might see temporary value fluctuations even though the underlying bonds remain sound.
Nevertheless, bonds generally experience less volatility than stocks. If you’re comparing to equity investments, bond funds offer a much smoother investment journey.
Who Should Invest in the Old Mutual Bond Fund?
Not every investment suits every investor. Here’s who typically benefits most from this fund:
Ideal Investor Profile:
- Time horizon: Planning to invest for 2+ years
- Risk appetite: Low to moderate (comfortable with some fluctuations)
- Return expectations: Seeking better returns than savings accounts
- Financial goal: Building medium-term wealth or generating steady income
- Investment style: Prefer professional management over DIY investing
Comparing Investment Options: Making the Right Choice
Understanding how different investment vehicles compare helps you make smarter decisions. Here’s a comprehensive comparison:
| Investment Type | Minimum Investment | Risk Level | Liquidity | Returns (Typical) | Best For |
| Old Mutual Bond Fund | KES 50,000 (or less via *480#) | Medium | 2-5 days | Higher than savings | 2+ year goals, steady income |
| Old Mutual Money Market | KES 1,000 | Low | 2-5 days | 10-11% | Emergency funds, short-term |
| Old Mutual Equity Fund | KES 50,000 | High | 2-5 days | 15%+ potential | 5+ years, growth focus |
| Bank Fixed Deposit | KES 10,000+ | Very Low | Locked period | 8-10% | Guaranteed returns |
| Treasury Bonds (Direct) | KES 50,000+ | Low | Until maturity | 12-16% | Long-term, hands-on |
Versus Money Market Funds
Money market funds invest in short-term instruments (treasury bills, commercial paper, call deposits), offering high liquidity and stable returns of 10-11%. The Old Mutual bond fund, investing in longer-term securities, typically delivers slightly higher returns but with moderate price fluctuations.
If you’re building an emergency fund or saving for goals within one year, stick with money market funds. For longer-term wealth building where you can handle some volatility, the bond fund makes more sense.
Versus Equity Funds
The Old Mutual equity fund invests in stocks listed on the Nairobi Securities Exchange, offering higher growth potential. However, stocks are significantly more volatile. You might gain 25% one year and lose 15% the next.
The bond fund provides more predictability and stability. If you’re risk-averse or approaching a financial milestone where you can’t afford losses, bonds offer peace of mind that equities can’t match.
Versus Direct Bond Purchases
You could buy treasury bonds directly through the CBK DhowCSD platform. However, this approach requires larger minimum investments (often KES 50,000 or more per bond) and demands that you monitor maturity dates and reinvestment opportunities yourself.
The Old Mutual bond fund handles this complexity for you, providing instant diversification across multiple bonds and offering professional management—all potentially accessible from KES 1,000 through their digital platform.
How to Get Started: Step-by-Step Guide
Ready to invest? The process is straightforward and can be completed in about 15-20 minutes.
Registration Options:
Option 1: Digital Platform (Under KES 150,000)
- Dial *480# from your registered mobile phone
- Follow on-screen prompts to create your account
- Provide personal details (name, ID number, KRA PIN)
- Select “Old Mutual Bond Fund” as your investment choice
- Make your initial deposit
Option 2: Online i-INVEST Platform
- Visit https://www.oldmutual.co.ke/investment/investment-portal/
- Click “Create Investment Profile”
- Fill in personal information and upload documents
- Choose the Old Mutual Bond Fund
- Fund your account via M-PESA, bank transfer, or standing order
And Option 3: Branch Visit
- Visit any Old Mutual branch nationwide
- Request unit trust application forms
- Complete the application with assistance from staff
- Submit required documents (ID, KRA PIN, proof of address)
- Make your initial deposit
Funding Your Account:
Once your account is active, you can deposit through multiple channels:
- M-PESA: Pay Bill 600500 (use your unit trust account number)
- Bank Transfer: Transfer to KCB Account 1102400750 (Old Mutual Bond Fund)
- Standing Order: Set up automatic monthly contributions
- Direct Debit: Authorize Old Mutual to debit your account
- Branch Deposit: Visit any Old Mutual branch with cash or a cheque
Investment Strategies to Maximize Returns in 2026
Getting into the fund is just the beginning. Here are proven strategies to make your investment work harder.
Start with Manageable Amounts
Don’t feel pressured to invest a large sum immediately. If you’re accessing through *480#, start with KES 1,000 and observe how the fund performs. Build confidence through experience rather than investing your entire savings.
Establish Regular Contributions
Consider setting up a standing order to invest between KES 2,000 and KES 5,000 monthly. Consistency matters more than size when building wealth. Even modest monthly contributions compound into substantial sums over 5 to 10 years.
Reinvest Your Returns
When the fund distributes income (typically on a monthly basis), choose to reinvest rather than withdraw it. This harnesses the power of compounding—earning returns on your returns. Over decades, compounding creates exponential growth rather than linear growth.
Maintain a Long-Term Perspective
Bond funds are designed for medium to long-term investing (2+ years minimum). Don’t panic during temporary market dips. Allow your investment to ride out economic cycles and deliver the expected returns.
Build a Diversified Portfolio
Don’t put all your money in one basket. Consider this allocation strategy:
Suggested Portfolio for Moderate Investors:
- 30% Money Market Fund (emergency fund, high liquidity)
- 40% Bond Fund (steady growth, moderate risk)
- 20% Equity Fund (long-term growth potential)
- 10% Alternative investments (REITs, SACCOs, etc.)
This balanced approach ensures liquidity when needed while maximizing growth potential across different asset classes.
Understanding Fees and Costs
Transparency about costs helps you plan better. Here’s what you’ll pay:
Fee Structure:
- Entry Fees: Zero (no charges when investing)
- Annual Management Fee: Approximately 2% of assets under management
- Withdrawal Fees: First withdrawal per month is free; subsequent withdrawals may incur charges
- Switching Fees: Usually none when moving between Old Mutual funds
- Exit Fees: None
Tax Considerations:
Interest income from bond funds is subject to 15% withholding tax in Kenya. This deduction is made automatically before returns are credited to your account. Additionally, if you sell units at a profit, capital gains tax may apply depending on current regulations.
Old Mutual handles tax deductions automatically and provides monthly statements showing all transactions and tax withholdings. This significantly simplifies your tax filing process.
Why 2026 Is Strategic for Bond Fund Investing
Looking ahead to 2026, several factors make the Old Mutual bond fund particularly attractive right now:
Economic Stabilization: Kenya’s inflation rate dropped to 3.5% in early 2025, creating a more stable environment for fixed-income investing. This stability typically benefits bond funds by reducing interest rate volatility.
Proven Institutional Strength: With over 175 years of investing experience across Africa and presence in 12 countries, Old Mutual has demonstrated resilience through multiple economic cycles. This track record provides confidence during uncertain times.
Digital Accessibility: The *480# platform makes investing incredibly convenient. You don’t need to visit branches, fill out extensive paperwork, or wait days for account activation. Everything happens from your mobile phone.
Portfolio Diversification Needs: As Kenya’s middle class grows and more individuals accumulate savings beyond emergency funds, the need for diversified investments increases. Bond funds fill the gap between ultra-safe money market funds and volatile equity investments.
Frequently Asked Questions
What is the minimum investment for the Old Mutual bond fund?
The minimum investment depends on your entry method. Through the *480# digital platform for investments under KES 150,000, you can start with as little as KES 1,000. For larger initial investments or direct branch applications, some funds require a minimum investment of KES 50,000 (particularly the equity fund), although bond funds are generally more accessible. Subsequent top-ups require a minimum of KES 1,000.
How quickly can I access my funds if I need to make a withdrawal?
Withdrawals are processed within 2-5 working days after submitting your redemption request. Your first withdrawal each month is typically free, though additional withdrawals within the same month may incur fees. While not instant like savings accounts, this turnaround time provides reasonable liquidity for planned expenses or emergencies.
How do returns from the bond fund compare to money market funds?
Bond funds typically deliver slightly higher returns than money market funds because they invest in longer-term securities with higher yields. However, bond funds also experience more significant fluctuations in unit prices. Money market funds maintain stable unit prices with consistent returns of around 10-11%, while bond funds aim for capital appreciation and income distribution, potentially delivering total returns 1-3% higher over medium to long periods.
Is my investment guaranteed or insured?
No, unit trust investments are not guaranteed or insured like bank deposits. Your investment value fluctuates based on the performance of the underlying bonds. However, protection comes from regulatory oversight by the Capital Markets Authority, the mandatory separation of fund manager, trustee, and custodian roles, and Old Mutual’s professional management. While returns aren’t guaranteed, the risk level is moderate—lower than equities but higher than money markets.
Can I switch from the bond fund to another Old Mutual fund?
Yes, absolutely. Old Mutual offers easy fund switching without penalties. If your financial goals or risk tolerance change, you can transfer your investment from the bond fund to one of the other funds, including the money market fund, equity fund, balanced fund, or dollar fund. This flexibility enables you to adjust your portfolio as circumstances evolve without the need to sell and repurchase units.
What documents are required to open an account?
For individual accounts, you’ll need:
- Copy of your National ID or passport
- KRA PIN certificate
- Proof of address (utility bill or bank statement)
- Completed application form
For corporate accounts, additional requirements apply, including business registration documents and information on authorised signatories. The application process is straightforward, and Old Mutual staff can guide you through document preparation.
Making Your Investment Decision
The Old Mutual bond fund offers a solid middle-ground investment for Kenyans seeking better returns than savings accounts without the volatility of stocks. With professional management by one of Africa’s leading financial institutions, regulatory oversight from CMA, and accessibility starting from KES 1,000 through digital platforms, it’s positioned as an attractive option for medium-term wealth building.
However, only you can determine if it fits your specific situation. Consider your financial goals, comfort with moderate risk, and investment timeline. If you’re targeting goals 2-5 years away and want professionally managed fixed-income exposure, this fund deserves serious consideration.
Remember: the best investment strategy is often a diversified one. The Old Mutual bond fund can play a valuable role alongside money market funds, equities, and other investments in your broader wealth-building plan.
Ready to take the next step? Start small by dialling *480# and begin your journey toward financial freedom. Your future self will thank you for the wise decisions you’re making today.
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