Segregated retirement benefit schemes closed the fourth quarter of 2025 managing approximately KShs 1.37 trillion in assets (excluding property), reflecting sustained growth in institutional retirement savings. The majority of these assets remain concentrated in large and mega schemes, which account for over 85% of the total fund value, highlighting the significant influence of large institutional mandates on overall market performance and capital allocation trends.
Asset allocation in Q4 2025 remained largely conservative. On a weighted average basis, schemes held 79.1% in fixed income instruments, 17.3% in equities, 3.4% in offshore investments, and a minimal allocation in cash. The strong bias toward fixed income continues to reflect a preference for capital preservation and stable income generation. However, the allocation to equities and offshore markets provided meaningful upside participation during periods of market strength, particularly over the past year.
For the quarter ending 31 December 2025, segregated schemes recorded a weighted average return of 2.6%. Although this represented a moderation from the exceptionally strong 13.2% recorded in Q4 2024, performance remained above quarterly inflation of 1.1%, preserving positive real returns for members. Equities were the main driver during the quarter, delivering 8.0%, supported by improved investor sentiment, easing monetary policy conditions, and strong corporate earnings. Fixed income generated 1.6%, reflecting slower bond price appreciation following earlier yield compression, while offshore investments contributed 1.3% during the period.
On a 12-month basis, performance remained robust, with segregated schemes posting a 26.2% one-year return. Equities led the gains with an impressive 63.8% annual return, driven by strong recovery in large-cap counters and improved market valuations. Fixed income returned 20.0% over the year, benefiting from easing interest rates and supportive bond market dynamics. Offshore investments delivered 15.2%, reflecting steady global market performance amid improving macroeconomic conditions.
Despite the slowdown in quarterly returns, the strong one-year outcome underscores the resilience of segregated schemes and their ability to balance capital preservation with long-term growth in a transitioning interest rate environment.
