Mutual funds down 7.6% in May
The mutual funds industry has declined by 7.6 per cent in May as compared to the preceding month to stand at Rs205 billion.
The mutual funds industry has declined by 7.6 per cent in May as compared to the preceding month to stand at Rs205 billion. The 10.6 per cent fall in the KSE-100 index had a significant impact on the size of the mutual funds industry during the month.
Equity-related funds remained the most affected in terms of decline as investors opted to shift their investment towards money market funds.
Faisal Shahji, Head of Research at Standard Capital Security, maintained that the decline in the mutual funds industry highlighted the need for regulations in the country. He explained that people were attracted towards money market funds since they were currently offering higher returns.
Analysts held that investors were now less interested in mutual funds owing to the uncertain returns and the availability of more lucrative options in the market. The mutual funds industry was valued at Rs250 billion some time back.
f the Rs205 billion, Rs174 billion was accounted for by open-ended funds. This category recorded a decline of 6.9 per cent compared to April 2010. During May, close-ended mutual funds also recorded a decline of 11 per cent to settle at Rs31 billion.
Income funds category earned an average annualised return of 4.5 per cent, significantly less than previous month’s average of 8.9 per cent. This drop in returns can be attributed to the fact that AKD-IF, JS-IF and POBOP posted negative annualised returns of 14.8 per cent, 72.1 per cent and 17.9 per cent respectively during the month.
On the other hand, the share of money market funds grew by 10 per cent month-on-month basis to reach Rs34.7 billion.
Published in The Express Tribune, July 7th, 2010.
Equity-related funds remained the most affected in terms of decline as investors opted to shift their investment towards money market funds.
Faisal Shahji, Head of Research at Standard Capital Security, maintained that the decline in the mutual funds industry highlighted the need for regulations in the country. He explained that people were attracted towards money market funds since they were currently offering higher returns.
Analysts held that investors were now less interested in mutual funds owing to the uncertain returns and the availability of more lucrative options in the market. The mutual funds industry was valued at Rs250 billion some time back.
f the Rs205 billion, Rs174 billion was accounted for by open-ended funds. This category recorded a decline of 6.9 per cent compared to April 2010. During May, close-ended mutual funds also recorded a decline of 11 per cent to settle at Rs31 billion.
Income funds category earned an average annualised return of 4.5 per cent, significantly less than previous month’s average of 8.9 per cent. This drop in returns can be attributed to the fact that AKD-IF, JS-IF and POBOP posted negative annualised returns of 14.8 per cent, 72.1 per cent and 17.9 per cent respectively during the month.
On the other hand, the share of money market funds grew by 10 per cent month-on-month basis to reach Rs34.7 billion.
Published in The Express Tribune, July 7th, 2010.