The rate of return of investable assets and economic growth rate in Kenya, 2001 - 2020 .

Abstract

What is the rate of return of a portfolio .)f investable assets in Kenya and how does it compare with the economic 'growth rate in Kenya? What can we learn about wealth inequality given the rate of return of investable assets and the economic growth rate in Kenya? Which investable assets have yielded the highest risk-adjusted rate of return in Kenya over time? What can we learn about the excess returns of different investable assets and the risk premium in Kenya? These are the key questions answered from a constructed dataset ofthe rate of returns of the investable assets in Kenya for a 20-year period, starting 200 I to 2020. The findings indicate the rate of return of investable assets in Kenya have always been higher than the economic growth, with a spread of as high as 8% on average, which justifies the high wealth inequality measured by the Gini coefficient of around 42%. Treasury bonds, with a Sharpe Ratio of 1.52, have consistently outperformed real estate with a Sharpe Ratio of 0.62 and stocks with a Sharpe Ratio or 0.13, respectively in terms of the risk-adjusted rate of return. Lastly, the risk premium has been low at around 2.23% on average mainly due to the low spread between the rate of returns of a possible basket of risky assets and basket of safe assets in Kenya.