Mutual funds grow 25% in fiscal 2011

Equity funds category outperforms stock market.

KARACHI:

The mutual funds industry grew of 25% in fiscal 2011 against the preceding year’s decline of 2% led by the money market and Islamic income funds category.

The money market funds and Islamic income funds category increased by massive 141% and 238% to reach at Rs77 billion and Rs20 billion, respectively, according to an InvestCap research note.

The equity funds category followed with an increase of 33% mainly on the back of the stock market performance, which surged by 28.5% during the year.

The fixed income funds category constituted 31% of the total industry size in June 2010 but declined massively during the last one year to reach Rs39 billion, and contribute only 16% of the total size.

Money market: the new largest category of the industry

The money market funds again showed a decent growth of 141 per cent during FY11 against witnessing growth of 876 per cent in fiscal 2010, with the induction of five money market funds in the category, says the note.

Net assets of the category rose to Rs77 billion in June 2011, making it the largest category in the mutual funds industry. The reason behind this extraordinary growth was the demand from investors due to the objective of the category to provide unit holders competitive returns from a low-risk portfolio of short duration assets while maintaining high liquidity, adds the note.





Published in The Express Tribune, July 28^th, 2011.