Mutual fund assets grow 19 per cent

Money market funds provide support.

Express February 22, 2011

KARACHI: The mutual funds industry showed a remarkable performance in seven months (July to January) of financial year 2010-11 and grew 19 per cent to Rs238 billion, mainly on account of Islamic income funds and money market funds, which rose 158 per cent and 95 per cent respectively, showed a research report.

Assets of Islamic income funds reached Rs15 billion and those of money market funds hit Rs62 billion, said the report released by InvestCap Research on Tuesday.

The size of open-end funds, which contribute more than 87 per cent to the industry, appreciated by 24 per cent during the seven months to reach Rs209 billion.

Month-on-month, the mutual funds industry recovered and grew six per cent in January after declining around one per cent in December, said InvestCap analyst Mazhar Sabir.

Money market funds were favourites

The money market funds remained in the limelight, showing a growth of 95 per cent in the size of assets in July to January and around 25 per cent growth in January, to close at Rs62 billion compared with Rs50 billion in December.

In January, the funds secured average return of 11.9 per cent per annum, with maximum return earned by Askari Sovereign Cash Fund at 12.5 per cent, said Sabir.

Equity funds backed by bourses

From July to January, the benchmark KSE-100 index surged 27 per cent and equity funds too recorded a growth in assets of 27 per cent. However in January, the asset size decreased by 0.5 per cent compared to the KSE-100 index which rose by 2.8 per cent.

Income funds down

Income funds faced a decline of six per cent to Rs44 billion despite the launch of two new funds. However in January, the size of the funds rose three per cent.

As far as returns of income funds are concerned, volatility continued in term finance certificate (TFC) pricing and during January, most of the income funds posted negative returns amid downward price movement in TFCs. In January, the income funds earned average annualised return of 1.1 per cent, which was significantly lower than last month, said Sabir.

Published in The Express Tribune, February 23rd, 2011.


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