Dominic Shukrani Kenga, Dr. Abdulkadir Ali Banafa & Dr. Abdullah Ibrahim Ali
Abstract
The general objective of the study was to investigate the effect of investment diversification in equities on the financial performance of the retirement benefits schemes in Kenya. The study further examined the moderating effect of the foreign exchange rate on the relationship between the independent and the dependent variables. The investment portfolio concentration strategy as well as the transaction cost theories were used in supporting this study. The study embraced a descriptive research design. The population employed included 87 retirement benefits schemes. The stratified random sampling technique used resulted into having 72 units of analysis. Primary and secondary quantitative data were employed in this study. Data analysis was through the statistical package for social sciences. Descriptive as well inferential statistics were generated in this study. The hypothesis testing led to the rejection of H01, thus depicting that investment diversification in equities has a significant positive effect on the financial performance of the retirement benefits schemes in Kenya. The hypothesis testing for the moderated relationship model led to the rejection of H02, thus confirming that foreign exchange rate has a significant positive moderating effect on the relationship between investment diversification in equities and the financial performance of the retirement benefits schemes in Kenya. The researcher therefore, recommends that the retirement benefits schemes should consider diversifying their investments in equities because it affects their financial performance. The researcher further recommends that the schemes should be vigilant on the volatility of the foreign exchange rate because it has a moderating effect on the relationship between investment diversification equities and their financial performance.