Mutual funds: Open-end funds grow, closed-end funds shrink
Industry shifting gears in Fiscal 2011.
KARACHI:
Open-end mutual funds in the country grew by 16.2 per cent to reach Rs195 billion during the first half of the current fiscal year. A report released by InvestCap Securities showed that open-end funds expanded while closed-end funds registered a decline of 11.2 per cent to settle at Rs28 billion during the same time.
“The reason behind the two categories moving in the opposite direction was the fact that three-month closed-end funds were converted into open-end funds during this period,” explained InvestCap head of research Khurrum Shehzad.
The overall industry showed an appreciation of 12 per cent year-on-year in terms of size against the 9 per cent growth witnessed in the first half of the previous fiscal year, the report highlighted.
Asset management companies in 2010 have preferred to launch new funds especially in the money market category.
Income funds posted an average annualised return of 20.7 per cent month-on-month in the first half of the current fiscal 2011. Money market funds earned 11.3 per cent annualised returns during the same period.
This segment grew by about nine per cent in the first half of fiscal 2011 mainly on the back of better performance of the equity market. Equity funds constitute about 32 per cent of the total industry, of which National Investment Trust holds about 53 per cent of total equity funds. Allied Bank Stock fund earned the highest return among stock funds and was the only one in the category that earned enough return to cover its risk level.
Stock-categorised mutual funds are expected to outperform the index based on their heavy investments in blue chip stocks, predicted InvestCap adding that money market funds will attract investors aiming for “better returns with short-term placement strategy.”
Published in The Express Tribune, February 1st, 2011.
Open-end mutual funds in the country grew by 16.2 per cent to reach Rs195 billion during the first half of the current fiscal year. A report released by InvestCap Securities showed that open-end funds expanded while closed-end funds registered a decline of 11.2 per cent to settle at Rs28 billion during the same time.
“The reason behind the two categories moving in the opposite direction was the fact that three-month closed-end funds were converted into open-end funds during this period,” explained InvestCap head of research Khurrum Shehzad.
The overall industry showed an appreciation of 12 per cent year-on-year in terms of size against the 9 per cent growth witnessed in the first half of the previous fiscal year, the report highlighted.
Asset management companies in 2010 have preferred to launch new funds especially in the money market category.
Income funds posted an average annualised return of 20.7 per cent month-on-month in the first half of the current fiscal 2011. Money market funds earned 11.3 per cent annualised returns during the same period.
This segment grew by about nine per cent in the first half of fiscal 2011 mainly on the back of better performance of the equity market. Equity funds constitute about 32 per cent of the total industry, of which National Investment Trust holds about 53 per cent of total equity funds. Allied Bank Stock fund earned the highest return among stock funds and was the only one in the category that earned enough return to cover its risk level.
Stock-categorised mutual funds are expected to outperform the index based on their heavy investments in blue chip stocks, predicted InvestCap adding that money market funds will attract investors aiming for “better returns with short-term placement strategy.”
Published in The Express Tribune, February 1st, 2011.