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The collective investment schemes in Kenya have witnessed increased volatility in their earnings, resulting in irregular growth in the industry. This necessitates the need to understand the factors contributing to poor financial returns from collective investment schemes. Hence this study sought to investigate the effect of equity investments and bond investments on Kenyan CIS’s performance. The specific objectives were: To assess the effect of equity investments, bond investments on financial performance of collective investment schemes in Kenya. The study was anchored on: modern portfolio theory and the efficient market hypothesis. The positivism philosophy was applied, with the firms adopting an explanatory research design. The target population was 17 Collective Investment Schemes registered by the Capital Markets Authority and were operational in the period 2010 to 2018.  Secondary data was sought from the Capital Markets Authority Annual reports and from the respective websites of the CIS’. Data was analyzed using descriptive statistics, correlational analysis and panel regression analysis. Hypotheses were tested at a significance level of 0.05. Findings indicate that equity investment, bond investments have an insignificant effect on CIS’ return on assets. Further, equity investments had a positive and significant effect on liquidity whereas bond investments had an insignificant effect on liquidity. The study recommends that CISs actively revise their equity investments and bond investments to stimulate financial returns.

Stock prices in Kenya have been experiencing drastic volatility over the years. In the year 2015 alone, the value of the listed companies shrunk by about 2.5 billion USD, representing about 25% of the national government annual budget. The performance of the stock market is an important proxy of a country’s economic environment. Rational investors constantly value and revise their portfolio composition so as to maximize their wealth. Whereas effectively diversified portfolio minimizes the unsystematic risk, systematic risks cannot be managed by simple diversification. Investors, therefore, need to understand the effect of these systematic risks on the stock performance. The study sought to determine the relationship between systematic risk factors using Inflation and interest rates and the performance of the stock market in Kenya. The study adopted a positivist philosophy and employed a correlation research design. The study targeted all the stock listed in the Nairobi Securities exchange. The study was underpinned by the Efficient Market Hypothesis, Arbitrage Pricing theory, and used integration analysis to establish the relationships between the variables of the study. The study found a significant long-run positive relationship between interest rate, inflation, and performance of the stock market in Kenya. Investment firms, the financial analyst should use past data on 91 Treasury bills rate and Inflation, to predict the future performance of stock exchange for the benefit of investors.