Unit trusts occupy a curious space in personal finance. In theory, they are investment vehicles designed to allocate capital across money market instruments, bonds, equities, or a combination of assets in pursuit of risk-adjusted returns. In practice, many investors treat them as enhanced savings accounts, places to park money safely, earn modest returns, and maintain liquidity. This blurred line raises an important question: are unit trusts being used as investments, or merely as a modern form of saving?
The answer lies largely in behavior rather than product design. Traditional savings emphasize capital preservation and easy access, while investing involves accepting uncertainty in pursuit of long-term growth. Many investors, particularly retail participants, prioritize certainty and liquidity over volatility-adjusted returns. As a result, money market unit trusts often become the default entry point, functioning as cash management tools rather than strategic investments.
Funds such as the Cytonn Money Market Fund illustrate this dynamic well. The fund invests in short-term, high-quality fixed income instruments and offers daily liquidity, transparency, and competitive yields relative to bank deposits. For many users, it replaces savings accounts entirely, used to hold emergency funds, manage short-term cash, or temporarily store income before expenditure. In this role, the fund behaves less like a growth investment and more like a flexible savings vehicle with superior efficiency.
Yet unit trusts are broader than money market funds. Bond, equity, and balanced funds are explicitly investment-oriented. They expose investors to market risk, duration risk, and equity volatility in exchange for higher expected returns over time. When these funds are evaluated on short-term performance or used for near-term needs, a mismatch emerges between product purpose and investor expectations.
This misalignment has consequences. Treating investment-oriented unit trusts as savings can lead to disappointment during market downturns, prompting premature withdrawals and value destruction. Conversely, using money market funds for long-term wealth building may result in missed opportunities, as returns struggle to outpace inflation over extended horizons. The issue, therefore, is not whether unit trusts are savings or investments, but whether they are being used appropriately.
From a portfolio perspective, unit trusts are most effective when viewed as building blocks. Money market funds provide liquidity and stability; bond funds offer income and moderate risk; equity funds drive long-term growth. Together, they support a layered financial strategy rather than a one-size-fits-all solution.
Ultimately, unit trusts are investment vehicles, but flexible ones. Their increasing use as savings substitutes reflects demand for transparency, accessibility, and better returns on idle cash. The challenge for investors is intentionality: understanding what role a unit trust plays in their financial plan. When purpose aligns with product, unit trusts move from being “just savings” to becoming powerful tools for disciplined, long-term wealth management.
Start your investment journey today with the Cytonn Money Market Fund. Call + 254 (0)709101200 or email sales@cytonn.com
